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The Management of Mozdzierz, Inc

question 8

Essay

The management of Mozdzierz, Inc., is considering a new product that would have a selling price of $83 per unit and projected sales of 90,000 units. The new product would require an investment of $200,000. The desired return on investment is 15%.
Required:
Determine the target cost per unit for the new product.


Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a bond or stock certificate.

Semi-Annually

Semi-annually refers to an event or action occurring twice a year, typically every six months.

Real Rate Of Return

The yearly return percentage on an investment, modified for price level changes caused by inflation or other external factors.

Nominal Rate

The nominal rate is the interest rate set by the lending institution, not adjusted for inflation, representing the face value of the interest rate.

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