Honda Motor Company is considering offering a $2500 rebate on its minivan, lowering the vehicles price from

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Honda Motor Company is considering offering a $2500 rebate on its minivan, lowering the vehicle’s price from $21,000 to $18,500. The marketing group estimates that this rebate will increase sales over the next year from 31,000 to 51,000 vehicles. Suppose Honda’s profit margin with the rebate is $6000 per vehicle. If the change in sales is the only consequence of this decision, what are its benefits and costs? Is it a good idea?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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