Choice Culinary Supply, Inc., sells restaurant equipment and supplies throughout most of the United States. Management is
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1. If Choice Culinary Supply requires a 20% return on investment (ROI), what is the maximum amount the company would be willing to pay the Italian manufacturer for the gelato machines?
2. Management would like to know how the purchase price of the machines would affect Choice Culinary Supply’s ROI. Construct a graph that shows Choice Culinary Supply’s ROI as a function of the purchase price of the gelato machine. Put the purchase price on the X-axis and the resulting ROI on the Y-axis. Plot the ROI for purchase prices between $2,400 and $3,400 per machine.
3. After many hours of negotiations, management has concluded that the Italian manufacturer is unwilling to sell the gelato machine at a low enough price for Choice Culinary Supply to earn its 20% required ROI. Apart from simply giving up on the idea of adding the gelato machine to Choice Culinary Supply’s product lines, what could management do?
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Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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