MKT 300 Chapter Notes - Chapter 10: Diminishing Returns, Net Present Value, Opportunity Cost

• School: Ryerson University
• Department: Marketing
• Course: MKT 300
• Professor: Armand Gervais

Document Summary

Sales forecasts, budgeting, and estimating returns from proposed marketing initiatives are often the focus of discussions between marketing and finance. Return: associated with profit or positive cash flow: also implies there has been a cash outflow. Net profit measures the profitability of ventures after accounting for all costs. Investment($) investment assets tied up in the enterprise. Cost of capital ($) = capital employed ($) * wacc. Cost of capital ($: if your profits are less than the costs of capital, you have lost value for the firm. Where economic profit is positive, value has been generated. In a single period, the return on any investment is the net profits produced in the time considered divided by the capital invested. Payback (#) = number of periods required to pay back the. Initial investment: the shorter the period, the more favourable because it is less, ignores all cash flows after the payback period risky.