SCENARIO 4-12 A Consulting Firm That Surveyed Consumers' Holiday Shopping Behavior Found

question 130

Short Answer

SCENARIO 4-12
A consulting firm that surveyed consumers' holiday shopping behavior found that the percentage of
consumers from the U.S., Canada, and China who said that they planned to spend more on holiday
shopping were 40%, 34% and 73%, respectively. The survey also found that the percentage of
consumers from the U.S., Canada, and China who said that they were willing to share personal
information with retailers in order to receive personalized offers from retailers were 55%, 46% and
72%, respectively. Assume that there are equal portions of consumers being surveyed from each of
the three countries, the survey results are good representations of the three populations of consumers,
and whether a consumer plans to spend more on holiday shopping is statistically independent of
whether he/she is willing to share personal information with retailers in order to receive personalized
offers from retailers.
-Referring to Scenario 4-12, if you randomly select a consumer from any of the three countries,
what is the probability that the consumer is from the China or Canada who plans to spend more
on holiday shopping and is willing to share personal information with retailers in order to receive
personalized offers from retailers?

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Definitions:

Present Value

The present value of a future amount of money or a series of cash flows, discounted by a certain rate of return.

Net Present Value Rule

A principle that states an investment should be made if the net present value of its cash flows, discounted at the hurdle rate, is positive.

Invest

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.