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MPE Inc. will soon enter a very competitive marketplace in which it will have limited inuence over the prices that are charged. Management and consultants
MPE Inc. will soon enter a very competitive marketplace in which it will have limited inuence over the prices that are charged. Management and consultants are currently working to finetune the company's sole service, which hopefully\"' will generate a 12 percent first-year return [profit] on the rm's $18,800,000 asset investment. Although the normal return in MPE's industryr is 14 percent, executives are willing to accept the lower figure because of various start-up inefficiencies. The following information is available for firstyear operations: Hours of service to be provided: 28,000 Anticipated variable cost per service hour: $21.10 Anticipated fixed cost $1,820,000 per year 2. How much profit must MPE generate in the first year to achieve a(n) 12 percent return? Target profit3. Calculate the revenue per hour that MPE must generate in the first year to achieve a(n) 12 percent return. (Round your answer to 2 decimal places.) Revenue per hourHow much profit must MPE generate in the second year to achieve a 14 percent return? Target profitCalculate the revenue per hour that MPE must generate in the second year to achieve a 14 percent return. (Round your answer to 2 decimal places.) Revenue per hour
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