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What is maximum amount the company would be willing to pay

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Problem - Free Riders Inc is considering adding a scooter to its motorcycle lineup. Management will negotiate the price of the scooter with its manufacturer. Management of Free Riders believes the scooters can be sold to its customers for $4,000 each At that price, annual sales of the scooters should be 200 units If the scooters are added to Free Riders' product lines, the company will have to invest $200,000 in inventories and special warehouse ?xtures The variable cost of selling the scooters will be $1,000 per unit. If Free Riders requires a 20% ROI, what is the maximum amount the company would be willing to pay the manufacturer for the scooters?

Reference no: EM132904693

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