Barney's Liquids and Aunt Bee's Lemonade Plan to Expand Their

question 12

Short Answer

Barney's Liquids and Aunt Bee's Lemonade plan to expand their international partnership for the marketing and distribution of ready- to- drink tea products by adding 11 countries to their current markets. If the agreement is reached, operations are expected to begin 2 years from now. The snack and beverage company forecasts that the agreement will bring additional revenue of $80 million in the first year of the operation i.e., the end of year 3), with amounts increasing by $2.5 million each year for the next 7 years. What is the present value now t =0) of the total revenue if the interest rate of 17% per year?

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Definitions:

Confirmation Bias

The tendency to interpret new evidence as confirmation of one's existing beliefs or theories.

Frames

A structure for organizing or enclosing something, often used metaphorically to describe conceptual boundaries or perspectives.

Preferences

Individual likings or choices among various options or alternatives.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, often referred to as the "I knew it all along" phenomenon.