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Compute the target cost of a bike

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Question - Smith and Company is considering adding a bike to its current product line. john, the too manager believes that in order to be competitive, the bike cannot be priced above $139. The company requires a minimum return of 25% on its investments, Launching the new bike would require an investment of $8,000,000 and sales are expected to be 40.000 units of the bike per year. Compute the target cost of a bike. What does this target cost mean for Smith and Company?

Reference no: EM133151553

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