Compute the cost-based price for new system

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Reference no: EM132404740

An air-conditioning manufacturer has spent $1,500,000 on developing a new ductless AC system.

The estimated market size for the ductless AC systems is 26,000 units in 2017, and is expected to grow at an annual rate of 10% over the next 4 years.

The firm predicts that with this new product, it will obtain a market share of 3% in 2017, 5% in 2018, 10% in 2019, and 15% in 2020.

The variable cost of manufacturing each unit is $250.

Compute the cost-based price for this new system, if target profit after 4 years is $500,000.

Reference no: EM132404740

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