Compute the target cost

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Reference no: EM133133663

Educational toys that are appropriate for preschool children are becoming increasingly popular. Parents are also drawn to electronic toys that help education their little ones. Emmy Corporation is considering introducing a new electronic educational toy for children in their pre- school years. Emmy believes that the world market for such educational toys is extremely competitive and that in order to be competitive, the price of the electronic educational toys that the company is developing cannot exceed $14. Emmy's required rate of return is 12% on all investments. An investment of $4,000,000 would be required to purchase the equipment needed to produce the 3,500,000 electronic educational toys that Emmy's management teams thinks it can sell each year at the $14 price.

Required: Show all work to earn credit. Please compute the target cost of one such electronic educational toy.

Reference no: EM133133663

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