Eastern Auto Supply Limited produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be full competitive the new battery that the company is planning can’t be priced at more than Tk. 130. At this price management is confident that the company can sell 100,000 batteries per year. The batteries would require an investment of Tk. 5,000,000 and the desired ROI is 20%. Required: Compute the target cost of one battery.
Eastern Auto Supply Limited produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be full competitive the new battery that the company is planning can’t be priced at more than Tk. 130. At this price management is confident that the company can sell 100,000 batteries per year. The batteries would require an investment of Tk. 5,000,000 and the desired ROI is 20%. Required: Compute the target cost of one battery.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Eastern Auto Supply Limited produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be full competitive the new battery that the company is planning can’t be priced at more than Tk. 130. At this price management is confident that the company can sell 100,000 batteries per year. The batteries would require an investment of Tk. 5,000,000 and the desired
Required:
Compute the target cost of one battery.
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