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Ajax Publishers sells magazine subscriptions. Its managers are considering a large promotional campaign in which it wll award prizes of $10,000,000. Other costs associated with
Ajax Publishers sells magazine subscriptions. Its managers are considering a large promotional campaign in which it wll award prizes of $10,000,000. Other costs associated with the campaign appear below. Television time Fee to Fred Mahon, TV spokesperson Mailing S 4,400,000 700,000 5,300,000 $10,400,000 Total Ajax plans to mail 20,000,000 packages containing entry blanks and forms for sub scribing to magazines. Ajax receives 25% of total subscription revenue. Experience indicates that about 15% of those receiving a package take out one or more sub- scriptions. The average subscription revenue from a respondent is $35. Required 1. What profit will Ajax earn if the campaign meets ail expectations? 2. What is the break-even point for the campaign expressed as a response rate, as- suming that each respondent orders $35 in magazine subscriptions
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