FEX, a grocery store, is considering offering one-hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $139,000 per year. FEX currently offers overnight film processing with annual sales of $90,000. While FEX expects that many of the one-hour photo sales will be to new customers, it also expects that most of the old customers will switch to the new one-hour machine. Specifically, FEX estimates that 75% of their current overnight photo customers will switch and use the one-hour service. Given these expectations, the level of incremental sales associated with introducing the new one hour photo service is closest to
FEX, a grocery store, is considering offering one-hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $139,000 per year. FEX currently offers overnight film processing with annual sales of $90,000. While FEX expects that many of the one-hour photo sales will be to new customers, it also expects that most of the old customers will switch to the new one-hour machine. Specifically, FEX estimates that 75% of their current overnight photo customers will switch and use the one-hour service. Given these expectations, the level of incremental sales associated with introducing the new one hour photo service is closest to
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![FEX, a grocery store, is considering offering one-hour photo developing in their store. The
firm expects that sales from the new one-hour machine will be $139,000 per year. FEX
currently offers overnight film processing with annual sales of $90,000. While FEX expects
that many of the one-hour photo sales will be to new customers, it also expects that most of
the old customers will switch to the new one-hour machine. Specifically, FEX estimates that
75% of their current overnight photo customers will switch and use the one-hour service.
Given these expectations, the level of incremental sales associated with introducing the new
one hour photo service is closest to
O $206,500
O $36,300
O $71,500
$139,000
O $121,800
O $94,800](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2ecdd16b-370f-428b-ac57-11025f3db7b2%2Ff0c6bf1d-2954-4507-885b-8be7622b7440%2Fvm0qlhl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:FEX, a grocery store, is considering offering one-hour photo developing in their store. The
firm expects that sales from the new one-hour machine will be $139,000 per year. FEX
currently offers overnight film processing with annual sales of $90,000. While FEX expects
that many of the one-hour photo sales will be to new customers, it also expects that most of
the old customers will switch to the new one-hour machine. Specifically, FEX estimates that
75% of their current overnight photo customers will switch and use the one-hour service.
Given these expectations, the level of incremental sales associated with introducing the new
one hour photo service is closest to
O $206,500
O $36,300
O $71,500
$139,000
O $121,800
O $94,800
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