Cool Comfort Currently Sells 340 Class a Spas, 465 Class

question 23

Multiple Choice

Cool Comfort currently sells 340 Class A spas, 465 Class C spas, and 125 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that, if it does, it can sell 360 of them. However, if the new spa is added, Class A sales are expected to decline to 235 units while the Class C sales are expected to decline to 275 units. The sales of the deluxe model will not be affected. Class A spas sell for an average of $10,700 each. Class C spas are priced at $18,700 and the deluxe model sells for $27,000 each. The new mid-range spa will sell for $13,500. What is the value of the erosion effect?

• A) −$3,510,500
• B) −$4,166,500
• C) −$3,827,000
• D) −$4,676,500
• E) −$3,657,000

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