Answer the following questions using the information below:
Ernie Shavers, Inc. manufactures electric shavers and is considering decreasing the price by $3 a unit for the coming year. With a $3 price decrease, the unit demand is expected to increase by 25%, and a high volume materials discount is expected to decrease the variable costs per unit by $1 per unit.
-Would you recommend the $3 price decrease?
Definitions:
Interest Computation
The process of calculating the interest due on a loan, based on the principal, interest rate, and time.
Lending Institution
An organization that provides financial loans to individuals or businesses, expecting repayment with interest.
Discounted
The process of determining the present value of a payment or a series of payments that will be made in the future, taking into consideration a specific interest rate.
Discounted
The process of determining the present value of a future amount, or stream of payments, by applying a discount rate.
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