Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price...

 

Transcribed Image Text:

Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,100. The marketing group estimates that this rebate will increase sales over the next year from 42,000 to 54,400 vehicles. Suppose Honda's profit margin with the rebate is $5,260 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? Hint: View this question in terms of incremental profits. The cost of the rebate will be $[ million. (Round to one decimal place.) The benefit of the rebate will be $[ million. (Round to one decimal place.) Is it a good idea? does or does not Offering the rebate look attractive. Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,100. The marketing group estimates that this rebate will increase sales over the next year from 42,000 to 54,400 vehicles. Suppose Honda's profit margin with the rebate is $5,260 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? Hint: View this question in terms of incremental profits. The cost of the rebate will be $[ million. (Round to one decimal place.) The benefit of the rebate will be $[ million. (Round to one decimal place.) Is it a good idea? does or does not Offering the rebate look attractive.

Answer rating: 100% (QA)

A 1 Given data 2 Amount of rebate A 3 Current unit sales B 4 Expected unit sales C 5 Profit m... View the full answer