A Newspaper Is Considering the Launch of an Online Edition

question 40

Essay

A newspaper is considering the launch of an online edition.The newspaper plans to go ahead only if it's convinced that more than 35% of current readers would subscribe.The newspaper contacts a simple random sample of 1000 current subscribers,and 345 of those surveyed expressed interest.What should the company do? Test an appropriate hypothesis and state your conclusion.Be sure the appropriate assumptions and conditions are satisfied before you proceed.Use a calculator to find z-scores and P-values.

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Definitions:

Cost of Capital

The yield a corporation needs to generate from its investment initiatives to keep its market valuation steady and draw in financing.

Stand-Alone Project

In capital budgeting, a project with no competition either for the task it is to accomplish or for resources.

Cost of Capital

The rate of return a company must pay to its investors for the use of their capital, essentially the cost of financing and investing in the company's assets.

NPV

Net present value. A capital budgeting technique that rates projects according to the total present value of all their associated cash flows. The higher the total or net present value, the better.