To Reduce the Price Sensitivity for Some of Its Products

question 20

Multiple Choice

To reduce the price sensitivity for some of its products, Washburn Guitars

• A) uses multiple suppliers for its raw materials.
• B) offers three months of free music lessons with the purchase of each guitar.
• C) uses endorsements by internationally known musicians who play Washburn signature guitars.
• D) offers a lifetime, unconditional warranty on all its instruments regardless of the price of its guitars.
• E) sponsors free music programs and special Washburn guitar camps for children.

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Definitions:

Profitability Index

A calculation that determines the relative profitability of an investment, indicating the value created per unit of investment.

Cash Inflows

Funds that enter a business, resulting from sales, financing, or investment returns, contributing to the company's cash balance.

Payback

the period of time required for an investment to generate funds to recover its initial outlay.

Annual Cash Flows

The total amount of money being transferred into and out of a business over one year.