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Geico, the number two auto insurer with $19 billion in revenue last year, spent $1.5 billion on advertising and plans to continue spending the
Geico, the number two auto insurer with $19 billion in revenue last year, spent $1.5 billion on advertising and plans to continue spending the same percentage of sales on advertising next year. The average advertising-to-sales ratio for Geico's industry is 0.3 percent of sales. If Geico projects $25 billion in sales next year, using the percentage-of-sales method of advertising budgeting, how much will the company budget for advertising if basing it on projected sales? How much would Geico budget if the company based its advertising spend on the industry advertising-to-sales ratio? Is Geico consistent with the average industry spend on advertising? The advertising-to-sales ratio for the last year is (Round to four decimal places.)
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