Solution-Explain how can firm''s manager extend planning

Explain how can firm''s manager extend planning horizon

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Reference no: EM1371071

Q. If Rhine Company ignores possibility that or firms may enter its market, it should set a price of $10,000 for its product, which is a power tool. But, if it does so, or firms will begin to enter market. During next two years, it will earn $4 million per year, but in following next two years, it will earn $1 million per year. On or hand, if it sets a price of $7,000, it will earn $2.5 million in each of next four years, since no entrants will appears.

a. If interest rate is 10 percent, should Rhine Company set a price of $7,000 or $10,000? Why? (Consider only next four years)

b. If interest rate is 8 percent, should Rhine Company set a price of $7,000 or $10,000? Why? (Consider only next four years)

c. results in parts a and b pertain to only next four years. Explain how can firm's manager extend planning horizon?

Reference no: EM1371071

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Explain how can firm''s manager extend planning horizon

Reference no: EM1371071

Reference no: EM1371071

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