With Respect to Retailing, What Is the "Party Plan

question 163

Multiple Choice

With respect to retailing, what is the "party plan"?

• A) A sales representative has a party at her home to demonstrate products to a group of friends and associates.
• B) A party is set up that demonstrates a product and provides free samples of the product to all in attendance.
• C) An individual is asked to tell two friends about a product, who are in turn each asked to tell two friends, etc. until a sufficient number of people are reached.
• D) A store has a special sale that resembles a party, and those who come are asked to buy the featured products.
• E) A consumer acts as a host and invites friends to view merchandise in a group setting, where a salesperson demonstrates the products.

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Definitions:

Compound Interest

Interest that is determined by taking into account not only the original principal of a deposit or loan but also all the interest that has been compounded in previous cycles.

Earnings Rate

The return on an investment or the amount of profit made compared to the amount of money invested.

Internal Rate of Return

An investment’s projected rate of return, calculated by finding the discount rate that sets the net present value of all cash flows (both positive and negative) to zero.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows, given a specified rate of return, adjusting for the time value of money.