19. You are the manager in charge of global operations at BankGlobal—a large commercial bank that operates in a number of countries around the world.

You must decide whether or not to launch a new advertising campaign in the U.S. market. Your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on U.S. operations. In addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $6 million if the U.S. advertising campaign were launched. Your goal is to maximize BankGlobal’s value. Should you launch the new campaign?

Explain.

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Financial Impact on U.S. Operations Pre-Advertising Campaign Post-Advertising Campaign Total Revenues $20,540,100 $30,347,800 Variable Cost TV airtime 6,100,000 9,045,700 Ad development labor 2,357,100 3,536,200 Total variable costs 8,457,100 12,581,900 Direct Fixed Cost Depreciation-computer equipment 1,500,000 1,500,000 Total direct fixed cost 1,500,000 1,500,000 Indirect Fixed Cost Managerial salaries 8,458,100 8,458,100 Office supplies 2,003,500 2,003,500 Total indirect fixed cost $10,461,600 $10,461,600