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Khaled Company specialized in heavy equipment. Khaled entered new project to manufacture new type of machine (XYZ). Khaled total assets of JD 5,000,000 and its

Khaled Company specialized in heavy equipment. Khaled entered new project to manufacture new type of machine (XYZ). Khaled total assets of JD 5,000,000 and its accepted net income is one million of JD. The investment in new project is JD 750,000 and the new machine sales is budgeted to be 1500 machines per year. The full cost of production is JD300 per unit.

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  1. What is the price should Khaled Company set for XYZ machine to achieve the required rate of return.
  2. Explain the different effects that face Khaled Company from pricing XYZ machine over or under correct pricing decision.

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