1. After conducting additional marketing research, Cyber Novelties estimates that by increasing the spending $75,000 annually for advertising and $0.05 per-unit allocation for extra promotion on the web will produce the following increases in estimated sales: 143,000 units at an $8 unit selling price, 48,000 units at $10, 18,000 units at $15, 12,000 units at $20, and 8,000 units at $24. Indicate the feasible range of prices if Cyber Novelties implements the advertising and promotional program.
2. At any income above $25,000 Cyber Novelties has to pay taxes at a rate of 33%, calculate Cyber Novelties net profits after tax (npat) and calculate its return on investment (ROI)[1] with: (1) a $60,000 investment, and (2) with the addition of the $75,000 investment.
3. Indicate the feasible price or prices if the advertisement and promotional proposal is not implemented but management insists on at least a $25,000 target return.