Explaining what is meant by the “present value of expected profits” requires that you first understand the meaning of the term "value" and then understanding the definition of "present value." There are various types of expressions when discussing value, for example: book value, market value, going-concern value, break-up value, and liquidating value. These are all forms of value that are discussed in business and economics. The “value” of a business is referred to in terms of net cash flow. This is the present value of expected future gains. Therefore, to get this information, you need to find the course of the business’s net cash flow in upcoming years. When you have identified this, you will need to convert the expected future profit values into present value. This can be done by reducing the value by a suitable interest rate.
It should be noted that expected profit in any one period can itself be considered as the difference between the total revenue and the total cost in that period. Thus, one can, alternatively, find the present value of expected future profits by subtracting the present value of expected future costs from ...
... middle of paper ...
...The main difference between oligopolies from the other types of markets is that oligopolies are dependent on the other sellers within the industry. This means that if one seller makes a significant change, whether it is price or production, it will have an effect on the other competitors within the market. Therefore, most oligopolies take into consideration about how their decisions may affect the competition.
Unlike the previous two markets, there are barriers when new businesses try to enter the market. These barriers could be anything from the financial necessities to technology. Oligopolies are usually distinguished by economies of scale. When defining economies of scale, this means that when production increases, the cost of production decreases. Therefore, economies of scale can cause smaller manufactures to be at a disadvantage to the larger manufacturers.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Profit Maximization and Maximization of Shareholder Equity Research and discuss the topics of profit maximization and maximization of shareholder equity. 1. Compare and Contrast the goals of profit maximization and maximization of shareholder equity. When discussing profit maximization and maximization of shareholder equity (i.e. wealth) we must take into account that shareholder equity is responsible for all of the difficulties of the environment. To whereas, profit maximization does not, in other words the profit maximization deals with revenues, it is a measure of business operations.... [tags: Investment, Decision making, Management, Risk]
757 words (2.2 pages)
- The movie Up in the Air is a Drama-Romance based on the life of a business man named Ryan Bingham. The film, like the one seen in class Intolerable Cruelty also stars actor George Clooney as Ryan. Ryan’s life consists of constant travelling due to business. At the beginning of the film, Ryan’s goal is to travel and reach 10 million miles. He tends to refer to other people as baggage in his backpack theory, the less attachment people have the lighter the backpack. Ryan’s job title is “corporate downsizer” which is practice is person hired to lay-off or “let go” of individuals from companies that are downsizing.... [tags: Economics, Unemployment, Supply and demand]
970 words (2.8 pages)
- My ultimate goal is to start Software Company which uses graphics and visualization technology to provide solutions for urban development and planning, bio-medical research and education. Master of Science in Computer Science from the University of Illinois – Urbana Champaign with specialization in Computer Graphics will further help me with my goal as it will enable me to develop advanced knowledge of this field and its applications. The Computer Science department at University of Illinois, known for its quality education and emphasis on research and innovation, will provide me with the opportunity to acquire the best knowledge of this field by learning from its renowned faculty and gain p... [tags: business ideas]
847 words (2.4 pages)
- PART A Conclusion 1: Population The ultimate goal for Australian Char is to be able to invest in the most lucrative market of the two available. One of the strongest indicator for an investor to consider is the population size, since the business would need to continue growing even in the wake of new competition. Chile has a very small population of only 17.8 million. In contrast, Mexico has well over six and a half times the population of Chile at 120 million. Mexico would be the preferred investment destination based on its large population size that provides an opportunity for the company to grow.... [tags: Inflation, Unemployment, Purchasing power parity]
767 words (2.2 pages)
- Earning profit is identified as the ultimate goal for firms. Consequently, investigating on recognizing the sources and factors that determines profitability has become among the major purposes in the strategic management research (Spanos, Zaralis and Lioukas, 2004 and Li and Ling, 2012). In their book, Bowles, Edwards and Roosevelt (2005) established their system to measure profitability. Different from Du pont analysis, Bowles system turns into business internal environment, and concentrates on the efficient utility of the resources (Figure 5).... [tags: Employment, Wage, Minimum wage, Salary]
807 words (2.3 pages)
- I am going to talk about profit maximization for a business and how it has affected me in my life. Living on my family farm my dad knows how to run a business. That is what he does to make a living for our family. The best way for us to succeed is for him to maximize his profit. Using some of the terms from chapter eleven, I am going to show you how my family survives on our family farm as a business. This is a way of maximizing profit through competition because he competes everyday when buying and selling animals and crops.... [tags: Economics, English-language films, Marketing]
795 words (2.3 pages)
- Jax’s ultimate goal is to change the nature of his MC from illegal ventures, to legal business opportunities to support his family and members. His premise behind moving the club in this direction is so that his home life can coexist in a peaceful nature with his club life and he will practice whatever method he sees meet to create this end goal. This lines up with the antihero characteristic of looking to create light in a world of darkness. To understand deeper why Jax operates this way, you have to look at his personality dimensions.... [tags: Personality psychology]
1179 words (3.4 pages)
- Everyday we are presented with moral dilemmas which require us to make a decision. The morally correct action in some of these situations might be incredibly easy. Should you hold the door open for an elderly woman. Obviously you should. But why is that seen as moral. Is it because it makes the woman happy and actions that increase happiness are moral. Or is it because there is an ethical standard we are meant to follow, regardless of how it makes people feel. And although happiness is something that most attempt to achieve, we must ask:is it the ultimate goal of our existence.... [tags: Ethics, Morality, Utilitarianism, Moral]
943 words (2.7 pages)
- Attaining Self Actualization There is no safe and familiar in a world constantly changing and advancing. The norms we adjust are always evolving slowly and never truly saying the same. Since existence, the very world itself has developed steadily, along with all forms of life residing on it. Humans are constantly creating, working forward not only to do more than those who came before, but also bring something new into the world. Becoming all one can be is a constant struggle taken on by nearly every person who has existed.... [tags: Maslow's hierarchy of needs, Abraham Maslow]
1244 words (3.6 pages)
- Hinduism is the major religion in India and Nepal with 900 million followers worldwide. 80 percent of the population in India is Hindu, making it the major religion of the country (BBC, 2009a). Hinduism started in the Indus River Valley in modern day Pakistan about 4000 years ago (United Religion Initiatives Kids, 2002). Unlike many other religions, it does not have a single founder, no single scripture, and no single set of teachings: its teachings vary and are based off of many different philosophies and holy books.... [tags: india, samsara, rituals, scripture]
1665 words (4.8 pages)