Smith and Company is considering adding a bike to its current product line. John, the top...
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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 $8,000,000 and sales are expected to be 40.000 units of the bike per year. Compute the target cost of a bike. What does this target cost mean for Smith and Company? 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 $8,000,000 and sales are expected to be 40.000 units of the bike per year. Compute the target cost of a bike. What does this target cost mean for Smith and Company?
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Step 1 Determine the desired profit margin The company requires a minimum return of 25 on its invest... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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