Question
Going Places Motor Company very recently undertook an aggressive marketing campaign to improve its market share. The company plans to spend $24,000.00 next year, $35,800
Going Places Motor Company very recently undertook an aggressive marketing campaign to improve its market share. The company plans to spend $24,000.00 next year, $35,800 in year two and $67,000.00 in year three of the campaign. This is expected to increase earnings (not including the cost of the campaign) by $2000.00 in year one $11,000.00 in year two and $21,000.00 in year three. The expected increase in earnings for every subsequent year is a constant $29,000.00. The price of Going Places' stock increased by 230442% after the campaign announcement. Expected annual EPS if the company does not undertake the campaign is $52.00 forever. What is the implied NPVGO of the marketing campaign under the assumption of a 12% required rate of return?
a.) The NPVGO is $122.87
b.)The NPVGO is $99.86
c.)The NPVGO is $111.84
d.)The NPVGO ID $119.50
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