Use the same transaction data for Magnificent Modems, Inc., as was used in Chapter 1.

Required

a. One of Magnificent Modems’ sales representatives receives a special offer to sell 1,000 modems at a price of $72 each. Should the offer be accepted?

b. Magnificent Modems has the opportunity to purchase the modems that it currently makes.

The modems can be purchased at a price of $76 each. Assuming the manufacturing equipment has a zero market value, should Magnificent buy the modems?

c. Assume that Magnificent Modems expects production and sales to grow to 10,000. At this volume of production, should Magnificent buy the modems?