Morgantown Bank Is Considering Two Different Advertising Campaigns

question 39

Essay

Morgantown Bank is considering two different advertising campaigns. The first is an integrated campaign consisting of radio, Internet, and direct mail advertising. The total cost of this campaign is $75,000 and it is expected to have a $12,000 return in the first year. The second campaign will consist of television advertising only. It will cost $180,000 and is expected to have a $25,000 return in the first year. Which campaign should it choose?

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Definitions:

Inflow Of Cash

Money or cash equivalents coming into a business, typically from operations, investments, or financing activities.

Bond Payable

A financial instrument representing a loan made by an investor to a borrower, typically corporate or governmental, with a promise to pay back the principal along with interest on specified dates.

Operating Activities

Activities that constitute the primary or main activities of a company, such as selling goods and services, which are reflected in the income statement.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.