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Victor, Inc. produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium
Victor, Inc. produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be fully competitive, the price of the new battery that the company is developing cannot exceed $100. At this price, management is confident that the company can sell 100,000 batteries per year. The batteries would require an investment of $10,000,000, and the desired ROI is 20%. Required: a) Compute the target cost of one battery. b) If Victor were to lower the price of the battery to $85, demand for the battery would increase to 120,000 batteries. The investment required would increase to $12,000,000 and the ROI would be 25%. Compute the target cost of one battery with these new parameters
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