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Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,300. The marketing group estimates that
Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,300. The marketing group estimates that this rebate will increase sales over the next year from 38,500 to 54,200 vehicles. Suppose Honda's profit margin with the rebate is $5,790 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? The cost of the rebate will be ___ million?
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