Answer the Following Question(s)using the Information Below

question 115

Multiple Choice

Answer the following question(s) using the information below.Sheltar's TV currently sells small televisions for $180.It has costs of $140.A competitor is bringing a new small television to market that will sell for $150.Management believes it must lower the price to $150 to compete in the market for small televisions.Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market.Sheltar's sales are currently 100,000 televisions per year.
-What is the change in operating income if marketing is correct and only the sales price is changed?

• A)$125,000
• B)$950,000
• C)$(3,450,000)
• D)$(2,900,000)
• E)$2,350,000)

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Definitions:

Selling Price

The amount of money for which a product or service is sold to customers.

Revolving Line of Credit

A credit facility extended by a financial institution to a customer that allows the customer to borrow up to a certain limit, pay down the balance, and then borrow again.

Simple Interest

Interest calculation method that involves multiplying the principal amount by the interest rate and the term of the loan or investment, without compounding.

Annual Rate

The interest rate for a loan or investment over a one-year period, often used to compare the yield of financial products.