This week you learned about the three core pricing strategies: penetration, neutral, and skim. Now we?re going to examine those pricing strategies in action. Hope you?re hungry, because you?re going to be looking at a lot of pizza.
In this interactivity, you?re going to briefly recap the three pricing strategies, use them to classify the major pizza chains based on exploring the online ordering process and then answer a few related questions. So let?s dig in!
Guided Response:
1. Re-familiarize yourself with the three main pricing strategies
o Review section 5.2 in the text as needed.
2. Research actual pizza pricing
o Visit each site, identify your location and simulate an order.
o Price out a medium cheese or pepperoni pizza.
o Proceed to payment stage, observing the selling process.
o Record your pizza choice and final price (minus tax).
o Execute your purchase as you see fit.
o Note: One brand doesn?t offer online ordering. Poke around their website for an online menu or consult fastfoodmenuprices.com.
3. Create a forum post that includes the following:
o A brief description of the three pricing strategies (from least to most expensive).
o Your research driven price strategy classifications of the five brands.
? For any pricing strategy where you have multiple brands, rank them from least to most expensive.
? Include the kind of pizza you priced out, your recorded prices and any other pertinent notes.
? Your classifications may differ from others. That?s okay.
o Your answers to the following questions:
? Did your perception of these chains? pricing strategies change based on this exercise? If so, how?
? Based on this exercise, identify three factors that complicate price comparisons.
? For you, which of these chains represents the greatest value and why? Explain how each of the Ps contributes to your answer.
4. Reply to and pitch your peers.
o Price-value perceptions vary by individual. Respond to three of your peers, including one who selected a different chain as offering the best value. Customize your ?pitch? to try to change their mind.
I Need Help! I Can Help!
Got questions about pricing strategies or this assignment? Or maybe a helpful tip to share? Please post to our week 3 help forum, so others can benefit!
FAQs
There isn?t a (insert pizza chain here) near me. What do I do?
? Just work with the nearest location your zip code search brings up.
Will Ashford subsidize my pizza purchases?
? Sadly, no. You?re on your own if you decide to order.
I?m lactose intolerant. Is there an alternate assignment?
? Very funny. To be clear, you only have to shop for pizza, not eat it.

Retail pizza chain #1

Visit the Pizza Hut site
Retail pizza chain #2

Visit the Dominos site
Retail pizza chain #3

Visit the Little Caesar?s site
Retail pizza chain #4

Visit the Papa John?s site
Retail pizza chain #5

Visit the CPK site
Logos: Wikimedia Com

This week you learned about the three core pricing strategies: penetration, neutral, and skim. Now we?re going to examine those pricing strategies in action. Hope you?re hungry, because you?re going to be looking at a lot of pizza.
In this interactivity, you?re going to briefly recap the three pricing strategies, use them to classify the major pizza chains based on exploring the online ordering process and then answer a few related questions. So let?s dig in!
Guided Response:
1. Re-familiarize yourself with the three main pricing strategies
o Review section 5.2 in the text as needed.
2. Research actual pizza pricing
o Visit each site, identify your location and simulate an order.
o Price out a medium cheese or pepperoni pizza.
o Proceed to payment stage, observing the selling process.
o Record your pizza choice and final price (minus tax).
o Execute your purchase as you see fit.
o Note: One brand doesn?t offer online ordering. Poke around their website for an online menu or consult fastfoodmenuprices.com.
3. Create a forum post that includes the following:
o A brief description of the three pricing strategies (from least to most expensive).
o Your research driven price strategy classifications of the five brands.
? For any pricing strategy where you have multiple brands, rank them from least to most expensive.
? Include the kind of pizza you priced out, your recorded prices and any other pertinent notes.
? Your classifications may differ from others. That?s okay.
o Your answers to the following questions:
? Did your perception of these chains? pricing strategies change based on this exercise? If so, how?
? Based on this exercise, identify three factors that complicate price comparisons.
? For you, which of these chains represents the greatest value and why? Explain how each of the Ps contributes to your answer.
4. Reply to and pitch your peers.
o Price-value perceptions vary by individual. Respond to three of your peers, including one who selected a different chain as offering the best value. Customize your ?pitch? to try to change their mind.
I Need Help! I Can Help!
Got questions about pricing strategies or this assignment? Or maybe a helpful tip to share? Please post to our week 3 help forum, so others can benefit!
FAQs
There isn?t a (insert pizza chain here) near me. What do I do?
? Just work with the nearest location your zip code search brings up.
Will Ashford subsidize my pizza purchases?
? Sadly, no. You?re on your own if you decide to order.
I?m lactose intolerant. Is there an alternate assignment?
? Very funny. To be clear, you only have to shop for pizza, not eat it.

Retail pizza chain #1

Visit the Pizza Hut site
Retail pizza chain #2

Visit the Dominos site
Retail pizza chain #3

Visit the Little Caesar?s site
Retail pizza chain #4

Visit the Papa John?s site
Retail pizza chain #5

Visit the CPK site
Logos: Wikimedia Com

BBA 3301 UNIT VII ASSIGNMENT.

Instructions: Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name.
Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished.

Question 1: (10 points). (Net present value calculation) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would
require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per year for 7 years. Calculate the project’s NPV using a discount
rate of 5 percent. (Round to the nearest dollar.)

a. If the discount rate is 5 percent, then the project’s NPV is: $

Question 2: (30 points). (Net present value calculation) Big Steve’s, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This
investment requires an initial outlay of $90,000 and will generate net cash inflows of $19,000 per year for 11 years. To answer Orange item questions, keep the text
that is the best answer.

a. What is the project’s NPV using a discount rate of 7 percent? (Round to the nearest dollar.)

If the discount rate is 7 percent, then the project’s NPV is: $

Should the project be accepted?

The project should be or should not be accepted because the NPV is

positive or negative and therefore adds or subtracts value to the firm.

b. What is the project’s NPV using a discount rate of 16 percent?

If the discount rate is 16 percent, then the project’s NPV is: $

Should the project be accepted? Why or why not?

c. What is this project’s internal rate of return? (Round to two decimal places.)

This project’s internal rate of return is: %

Should the project be accepted? Why or why not?

If the project’s required discount rate is 7%, then the project should be or should not be

accepted because the IRR is higher than or lower than the required discount rate.

If the project’s required discount rate is 16%, then the project should be or should not be

accepted because the IRR is higher than or lower than the required discount rate.
Question 3: (15 points). (Related to Checkpoint 11.2) (Equivalent annual cost calculation) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is
analyzing two alternative configurations for the firm’s new plasma cutter shop. The two alternatives that are denoted A and B below perform the same task and although
they each cost to purchase and install they offer very different cash flows. Alternative A has a useful life of 7 years whereas Alternative B will only last for 3
years. The after-tax cash flows from the two projects are as follows:
a. Calculate each project’s equivalent annual cost (EAC) given a discount rate of 10 percent. (Round to the nearest cent.)

a. Alternative A’s equivalent annual cost (EAC) at a discount rate of 10% is: $
b. Alternative B’s equivalent annual cost (EAC) at a discount rate of 10% is $

b. Which of the alternatives do you think Barry should select? Why? (Select the best choice below.)

a. This cannot be determined from the information provided.
b. Alternative B should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative A.
c. Alternative A should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative B.
d. Alternative A should be selected because it has the highest NPV.
Question 4: (10 points). (IRR calculation) What is the internal rate of return for the following project: An initial outlay of $9,000 resulting in a single cash inflow
of $15,424 in 7 years. (Round to the nearest whole percent.)

a. The internal rate of return for the project is: %

Question 5: (10 points). (IRR calculation) Jella Cosmetics is considering a project that costs $750,000 and is expected to last for 9 years and produce future cash
flows of $180,000 per year. If the appropriate discount rate for this project is 17 percent, what is the project’s IRR? (Round to two decimal places.)
a. The project’s IRR is: %

Question 6: (10 points) (IRR, payback, and calculating a missing cash flow) Mode Publishing is considering a new printing facility that will involve a large initial
outlay and then result in a series of positive cash flows for four years. The estimated cash flows associated with this project are:
If you know that the project has a regular payback of 2.9 years, what is the project’s internal rate of return?

a. The IRR of the project is: %

Question 7: (15 points) (Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following
projected cash flows:
If the appropriate discount rate on these projects is 11 percent, which would be chosen and why? (Round to the nearest cent.)
a. The NPV of Project A is: $
b. The NPV of Project B is: $
Which project would be chosen and why? (Select the best choice below.)

a. Cannor choose without comparing their IRRs.
b. Choose A because its NPV is higher.
c. Choose both because they both have positive NPVs.
d. Choose B because its NPV is higher.