(Ignore Income Taxes in This Problem Based on the Data Given, the Annual Cost Savings Would

question 31

Multiple Choice

(Ignore income taxes in this problem.) Given the following data: $\begin{array}{lrr} \text { Present investment required. } &£ 10,000\\ \text {Net present value. } &£ 1,300\\ \text {Annual cost savings. } &£?\\ \text { Dis count rate. } &14 \%\\ \text {Life of the project. } &\text { 8 years } \\\end{array}$

Based on the data given, the annual cost savings would be (rounded)

• A)£4,024.
• B)£2,436.
• C)£1,875.
• D)£3,704.

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Definitions:

Cost-plus Pricing Strategy

A pricing method where a fixed percentage or amount is added to the total cost of producing a product or service to determine its selling price.

Fixed Margin

A set profit margin that does not vary with sales volume or production costs.

Domestic Market

The marketplace of goods and services offered within a country's borders, as opposed to international markets.

Beverage Company

A company that specializes in the production and distribution of drinks, including both alcoholic and non-alcoholic beverages.