Soft and Cuddly Is Considering a New Toy That Will

question 76

Multiple Choice

Soft and Cuddly is considering a new toy that will produce the following cash flows.Should the company produce this toy based on IRR if the firm requires a rate of return of 17.5 percent? $$\begin{array} { | c | r | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - \$ 132,000 \\\hline 1 & 97,000 \\\hline 2 & 42,000 \\\hline 3 & 28,000 \\\hline\end{array}$$

• A)Yes, because the project's rate of return is 16.45 percent
• B)Yes, because the project's rate of return is 11.47 percent
• C)No, because the project's rate of return is 16.45 percent
• D)No, because the project's rate of return is 11.47 percent
• E)No, because the internal rate of return is zero percent

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Definitions:

Postpurchase Stage

The phase following the purchase of a product during which a consumer evaluates their satisfaction with the purchase and makes decisions regarding future purchases.

Marketers

Professionals who plan and execute the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

Personal Selling

A direct form of marketing where sales representatives personally meet with potential customers to promote and sell a product or service.

Prepurchase Stage

The initial phase of the consumer decision-making process where potential buyers recognize a need or desire and begin gathering information about how to fulfill it.