Kurt Meyer Wants to Sell a Model T Ford That

question 7

Multiple Choice

Kurt Meyer wants to sell a Model T Ford that he inherited from his grandfather.A preliminary investigation has shown many people would be interested in this type of automobile.He has taken out an advertisement in his local auto trade paper and provided customers with a toll-free number to make an appointment to drive the car.He has also read in the auto trade papers that similar cars to the one that he owns are selling for about $4,000.Before selling his Model T,what else should Meyer find out?

• A) whether the car can meet the demands of potential customers
• B) how to promote the car to generate significant visibility for the ad
• C) where the car should be located to secure optimum drive-up business
• D) how to price the car so that customers will seek out his vehicle

---

Definitions:

Cost of Capital

The minimum return that a company must earn on its investments to maintain its market value and satisfy its creditors and investors.

Firm's Value

The total worth of a company, determined by its financing structures, including equity and debt, and the present value of its expected future cash flows.

IRR Method

A financial analysis technique used to evaluate the desirability of investments or projects based on their internal rate of return, aiming to identify the profitability and potential return.

Time Value of Money

The concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.