Is this decision to give the rebate a wise one

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Reference no: EM132069979

1. Tree Cutters Inc., a manufacturer of power tools, decides to offer a rebate of $100 on its 18-inch mid-range chain saw, which currently has a retail price of $470. The firm's marketers estimate that, as a result of the promotional rebate, sales of this model will increase from 50,000 to 80,000 units next year. The profit margin for Tree Cutters Inc., before the rebate is $150 per unit. Based on the given information, is this decision to give the rebate a wise one?

2. You grandfather offers to sell you his used 1958 Cadillac Eldorado for $50,000. You note that very similar cars are selling on the open market for $90,000. You don't care for classic care and would really rather buy a new Ford Explorer for $356,000. What is the net value of buying the Cadillac?

Reference no: EM132069979

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