Question
How do I find nominal price increase and nominal variable cost increase without the real rate. I provided some of the information below. Research and
How do I find nominal price increase and nominal variable cost increase without the real rate. I provided some of the information below.
Research and development $10,000,000 Test marketing cost $5,000,000 Initial equipment cost $160,000,000 Equipment salvage value $65,000,000 Year 1 depreciation 14.30% Year 2 depreciation 24.50% Year 3 depreciation 17.50% Year 4 depreciation 12.50% OEM market: Price $41 Variable cost $29 Automobile production 6,200,000 Growth rate 2.50% Market share 11.00% Replacement market: Price $62 Variable cost $29 Market sales 32,000,000 Growth rate 2.00% Market share 8.00% Price increase above inflation 1% VC increase above inflation 1% Marketing and general costs $43,000,000 Tax rate 23% Inflation rate 3.25% Required return 13.40% Initial NWC $9,000,000 NWC percentage of sales 15%
Nominal price increase Nominal VC increase
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