Stone Company Is Considering Introducing a New Line of Pagers

question 30

Essay

Stone Company is considering introducing a new line of pagers, targeting the preteen population. Stone believes that if the pagers can be priced competitively at $45, approximately 300,000 units can be sold. The controller has determined that an investment in new equipment totaling $4,000,000 will be required. Stone requires a minimum rate of return of 16% on all investments.
Instructions
Compute the target cost per unit of the pager.

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Definitions:

Economic Growth

The increase in the value of goods and services produced by an economy over time, typically measured as the percent change in real GDP.

Temporary Workers

Individuals employed on a short-term basis, often to meet seasonal demands, cover for absent employees, or complete particular projects.

Debt Relief

The partial or total remission of debts, especially those owed by developing countries, by creditors, often to promote economic stability and development.

Foreign Aid

Financial or other assistance provided by one country to another, often in the form of grants, loans, or technical assistance, to promote development and welfare.