PLM's Managers Are Attempting to Build a New Product, a Better

question 39

Multiple Choice

PLM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. PLM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. If PLM's required profit margin is 25%, the target cost of a better mousetrap is:

• A) $7.50
• B) $12.50
• C) $2.50
• D) None of the above

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price, often used by investors to gauge the income a company's stock will generate.

Dividend

A portion of a company's earnings that is distributed to shareholders, usually as cash or additional shares, as a reward for their investment in the company's equity.