You have been retained as a consultant by Land O'Lakes Corp. The company estimates that the annual
Question:
You have been retained as a consultant by Land O'Lakes® Corp. The company estimates that the annual retail butter market is 300 million pounds (by weight) nationally, of which private labels have a 41% market share by volume and Land O Lakes has a 36% market share by volume. The price of a pound of Land O'Lakes butter is $3.89 and it commands a one-dollar premium over private label butter, Land O'Lakes spent $15 million in 2015 on marketing, advertising, and brand promotion expenses for the Land O'Lakes butter brand. You have been asked to calculate the brand value in 2015 of the Land O'Lakes butter brand using the premium pricing method of measuring brand value.
(You can assume a future growth rate of 8% and a discount rate of 5% as well as a 10-year time horizon).
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel