Use the Information Below to Answer the Following Question(s)

question 61

Multiple Choice

Use the information below to answer the following question(s) .Thacker Company has two regional offices.The information for each is as follows:

-An automotive dealership, with a book value of $3,000,000, and total assets of $5,000,000, has a long history of earning 18%.Last year, the company earned $900,000.The owner is considering acquiring another dealership in a nearby town.If the expansion increases income by 50%, what is the maximum amount of investment the owner can make in the new dealership in order to maintain his desired 18% return?

• A)$1,350,000
• B)$9,000,000
• C)$5,000,000
• D)$3,000,000
• E)$2,500,000

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Definitions:

Demand Function

A mathematical expression that describes the relationship between the price of a good or service and the quantity demanded by consumers.

Typeset

The process of arranging and setting text material for printing, historically done using physical types but now primarily done using computer software.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service, critical for decision-making in production and pricing strategies.

Demand Function

A mathematical expression showing the relationship between the quantity of a good demanded by consumers and its price.