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Assume That a Health Spa Can Earn an Additional $35,000

question 60

Essay

Assume that a health spa can earn an additional $35,000 of revenue each year from advertising every day in a local newspaper.What must the additional cost of this daily advertising be to make this advertising economically rational?


Definitions:

Net Income

The net income a firm retains after deducting all operational expenses and taxes from its gross revenue.

Net Cash

The amount of cash available after adjusting for cash inflows and outflows over a given period.

Financing Activities

Transactions and events that involve raising funds for the company and repaying funds to investors, such as issuing stock or borrowing.

Cash Dividend

A payment made by a company out of its profits to shareholders in the form of cash.

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