Dexter, Inc

question 8

Multiple Choice

Dexter, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and sale of 1,000 units, with estimated costs as follows: The average amount of capital invested in the laptop product line is $900,000 and Dexter's target return on investment is 18%.
What price must Dexter charge if the company uses cost-plus pricing based on total variable cost?

• A) $712.
• B) $900.
• C) $1,030.
• D) $1,192.
• E) None of the other answers are correct.

Analyze the impact of sales changes on working capital components.

Recognize the influence of biases and estimation errors on capital budgeting decisions.

Understand terminal value calculation and its implications on capital budgeting.

Comprehend the specific application of MACRS for tax purposes and its impact on project profitability.

---

Definitions:

Goods Exports

The act of selling and shipping goods from one country to another country.

Net Investment Income

The total income received from investment assets, after deducting all related expenses.

Assets Abroad

Financial or physical holdings owned by individuals or entities in countries other than their own.

Current Account Balance

A measure of a country's trade, earnings on foreign investments minus payments to foreign investors, and cash transfers, over a period.