6.17

Baabak Ashuri, Georgia Institute of Technology 6-17 A firm manufactures and sells high quality busi ness printers and ink toners. Each printer sells for $650 and each toner for $100. The average user keeps the printer for 5 years and consumes 4 toners every year. In response to a recent significant drop in printer sales (which will reduce future toner sales as well) the firm wants to lower the printer price to $500. Assume that income from toner sales occurs at year-end and the firm's cost of capital is 10%. How much of an increase is needed in the toner price to cover the loss in printer price? Contributed by Yasser Alhenawi, University of Evansville 6-18 A moto