The Owner of Darkest Tans Unlimited in a Local Mall

question 12

Multiple Choice

The owner of Darkest Tans Unlimited in a local mall is forecasting this month's (October's) demand for the one new tanning booth based on the following historical data: $$\begin{array} { | l | c | } \hline { \text { Month } } & \text { Number of Visits } \\\hline \text { April } & 100 \\\hline \text { May } & 140 \\\hline \text { June } & 110 \\\hline \text { July } & 150 \\\hline \text { August } & 120 \\\hline \text { September } & 160 \\\hline\end{array}$$
What is this month's forecast using exponential smoothing with alpha = .2, if August's forecast was 145?

• A) 144
• B) 140
• C) 142
• D) 148
• E) 163

Describe the adjustements made to dividend costs to account for flotation expenses.

Understand the fundamental concepts of the Capital Asset Pricing Model (CAPM) and its role in calculating a firm's cost of equity.

Recognize the importance of using an appropriate discount rate, specifically the weighted average cost of capital (WACC), in evaluating investment projects, including adjustments for project risk.

Calculate the weighted average cost of capital (WACC) using a firm's target capital structure and component costs of capital, considering the effect of taxes.

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Definitions:

Allocate Resources

The process of distributing available resources among various projects, departments, or entities to achieve desired objectives.

Benefit Surpluses

The extra utility or satisfaction gained by consumers when the price they are willing to pay for a good or service exceeds the market price.

Willingness To Pay

The maximum amount an individual is prepared to offer for a good or service, reflecting the value they place on it.

Supply Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply to the market.