Question
The Innovative and Creative Company (TICC) is planning to launch a new product (Product A) which requires an investment of $500,000 in equipment and other
The Innovative and Creative Company (TICC) is planning to launch a new product (Product A) which requires an investment of $500,000 in equipment and other assets for the product to be produced and sold. TICC expects a return on investment (ROI) of 10% per annum and expects to sell 50,000 units of Product A each year. Product A is expected to be produced for 5 years.
Based on the above, which of the following statements are true
1. The markup (or profit per unit) for Product A to ensure TICC meets it ROI (on its $500,000 investment) is $1.00 per unit
2. The markup (or profit per unit) calculated for Product A to ensure TICC meets its ROI cannot be used if TICC uses Target Pricing to determine the long term price of Product A
3. The markup (or profit per unit) calculated for Product A to ensure TICC meets its ROI cannot be used if TICC uses Cost Plus Pricing to determine the long term price of Product A
Group of answer choices
Statement 1 only
Statement 2 only
Statement 3 only
Statement 1 and 2 only
Statement 1 and 3 only
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