A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product.
A) $20.25
B) $18.23
C) $18.10
D) $20.70
E) $25.50

Question

Quizplus · Accepted Answer

The target-return price is calculated as follows:Target-return price = Cost per unit + (ROI x Investment) / Units sold= $18 + (0.15 x $750,000) / 50,000= $18 + $22,500 / 50,000= $18 + $0.45= $18.45

A Manufacturer Has Invested $750,000 in a New Product and Wants