Heavy Duty Inc

question 35

Multiple Choice

Heavy Duty Inc.,a manufacturer of power tools,decides to offer a rebate of $100 on its 16-inch mid-range chain saw,which currently has a retail price $470.Heavy Duty's marketers estimate that,as a result of the rebate,sales of this model will increase from 50,000 to 80,000 units next year.The profit margin for Heavy Duty before the rebate is $150.Based on the given information,is the decision to give the rebate a wise one?

• A)No,since costs are $5.0 million more than benefits.
• B)No,since costs are $3.5 million more than benefits.
• C)Yes,since the benefits are $0.2 million more than the costs.
• D)Yes,since the benefits are $1.5 million more than the costs.
• E)Yes,since the benefits are $0.5 million more than the costs.

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