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I just need Question 2 & 3. Thanks ! Use the following scenario for the following 5 questions. A chain of flower shops in Houston
I just need Question 2 & 3. Thanks !
Use the following scenario for the following 5 questions. A chain of flower shops in Houston has been in business 2 years. Last year revenues were $1 million with net profit of $50,000. If the economy grows rapidly next year, the owner expects its sales to grow by 50 percent. However, if the economy exhibits average growth, she expects a sales growth of 30 percent. For a slow economic growth scenario, sales are expected to grow next year at a 10 percent rate. The owner has consulted economic analysts who estimate the probability of each scenario occurring to be: rapid growth (.30); average growth (.50), and slow growth (20). Net profit margins are also expected to vary with the level of economic activity next year. If slow growth occurs, the net profit margin is expected to be 5 percent. Net profit margins of 7 percent and 10 percent are expected for average and rapid growth scenarios, respectively. Question 1: Estimate the expected value of the sales growth rate for the company next year. a 32% Ob 16% O c. 45% Od. 67% Save A Using the scenario in Question 1, what would be the amount of sales next year under the rapid growth scenario? a $1,300,000 Ob.$1,500,000 O c. $1,100,000 d. none of the choices QUESTION 3 Using the scenario in Question 1, what is the overall expected value of sales for next year? a. O a $1,000,000 Ob.$1,100,000 O c. $1,500,000 O d. $1,320,000 Step by Step Solution
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