XXX __% XXX _% XXX _% XXX CASH DISCOUNT (You may assume there are 360 days in a year for simplicity) See P. 433. Effective Discount -listed %*(360/(net days-discount days)) 1. Faith has received a bill with the following cash discount terms: 3/10, net 60. What is the effective discount will realize if she pays the bill in 10 days? 7.2% b. $2 c. 21.6% d. 36.6% e $20 TARGET RETURN PRICING Target Return Formula: TR (units) - TFC + (Target Return % Investment) PVC per unit TFC + (Target Return Requirement) FCC TR(S) = TR (units) * P This is similar to break even, but the target return $ must be calculated and added to the Fixed Costs to make the calculations. Ember Manufacturing Company (EMC) uses target return pricing and expects to sell 40,000 units of its product in the coming year. EMC's fixed costs will be $500,000 and its variable costs will be about $20 per unit. If EMC seeks to cam a 10 percent return on its investment of $1,000,000, what price should it charge? $21.00 522 50 $20.00 $35.00 532.50 mo