Explain how a firm benefits from customers who make multiple purchases versus customers who make just one purchase
What will be an ideal response?
A firm's profitability and long-term success will be far greater if it develops long-term relationships with its customers so that those customers buy from this firm again and again. Costs will be far higher and profits lower if each customer purchase is a first-time sale, as it is more expensive to attract a new customer than it is to maintain a relationship with a current customer.
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Of the following, which would be the most effective proof device to demonstrate the benefits of Kaygo tires?
A) a detailed PowerPoint presentation B) a test-drive in which the buyer can feel the difference in tires C) a testimonial from another buyer about the excellent post-sale service D) a research report showing decreased fuel costs from using the tires E) a series of questions designed to discover what the buyer needs
Four years ago, Acnex Inc. granted Ms. Cardena an incentive stock option (ISO) to purchase 1,000 shares of Acnex stock at $44 per share. On date of grant, the market price was $42 per share. This year, Ms. Cardena exercised the ISO when the market price was $75 per share. Which of the following statements is true?
A. Ms. Cardena recognizes no ordinary income, and Acnex is allowed no deduction this year. B. Ms. Cardena recognizes no ordinary income, but Acnex is allowed a $31,000 deduction this year. C. Ms. Cardena recognizes $31,000 ordinary income, and Acnex is allowed a $31,000 deduction this year. D. Ms. Cardena recognizes $31,000 ordinary income, but Acnex is allowed no deduction this year.
The pure play method
A) uses the beta of a firm that is similar to the project being analyzed to determine the required rate of return for the project. B) calculates beta using only project returns. C) selects one of the firm's existing projects that is similar to the project being analyzed and uses that project's required rate of return. D) selects a firm similar to the project being analyzed and uses its returns as the market return in estimating a project beta.
In the factory, ________ show the purpose for which expenditures are made.
A. deferred accounts B. live accounts C. defined accounts D. functional accounts E. natural accounts