Question: Hi need help if this answer is right? and if not what is the right answer with explanation and computation considering all factors (numbers) Smith

Hi need help if this answer is right? and if not what is the right answer with explanation and computation considering all factors (numbers)

Smith and Company is considering adding a bike to its current product line. John, the top manager believes that in order to be competitive, the bike cannot be priced above $139. The company requires a minimum return of 25% on its investments. Launching the new bike would require an investment of $8,660,060 and sales are expected to be 40,660 units of the bike per year. Compute the target cost of a bike. What does this target cost mean for Smith and Company? Minimum ROI (25%) - $2,666,666 $2,666,660 / 46,606 units = $56funit (Desired Profit) Target Cost: If Selling Price at $139: $139 - $56 - $89 CH Ratio: $56 I $139 = 6.3597 or 35.97%

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