What statement suggests that the Johnson & Johnson Tylenol ad stating that "last year hospitals dispensed 10 times as much Tylenol as the next four brands combined" was suspiciously deceptive?
A. It was a simple statement of a valid claim about the product.
B. Johnson & Johnson wanted consumers to think that the medical profession and hospitals believed it was the most effective acetaminophen treatment on the market.
C. It was an effort to call attention to the practice of selling the drug to hospitals at a deep discount.
D. Johnson & Johnson wanted to show its commitment to lowering medical costs to consumers.
Answer: B
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A money-growth rule that does not respond to the state of the economy is a ____ rule.
A. lagging B. leading C. nonactivist D. activist
If a company issues both a balance sheet and an income statement with comparative figures from last year, a statement of cash flows:
a. is no longer necessary; but may be used at the company's option. b. should not be issued. c. should be issued for the current year only. d. should be issued for each period for which an income statement is presented.
Collins Inc applies overhead using direct labor hours. The following data are available for the year: Estimated direct labor hours 1,050,000 Actual direct labor hours 1,000,000 Overhead applied $5,000,000 Actual overhead $4,850,000 What predetermined overhead rate did Collins use?
The cost of capital for two mutually exclusive projects that are being considered is 12%. Project K has an IRR of 20% while Project R's IRR is 15%. The projects have the same NPV at the 12% current cost of capital. Interest rates are currently high. However, you believe that money costs and thus your cost of capital will soon decline. You also think that the projects will not be funded until the cost of capital has decreased, and their cash flows will not be affected by the change in economic conditions. Under these conditions, which of the following statements is CORRECT?
A. You should delay a decision until you have more information on the projects, even if this means that a competitor might come in and capture this market. B. You should recommend Project R, because at the new cost of capital it will have the higher NPV. C. You should recommend Project K, because at the new cost of capital it will have the higher NPV. D. You should recommend Project R because it will have both a higher IRR and a higher NPV under the new conditions. E. You should reject both projects because they will both have negative NPVs under the new conditions.