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Heiko Company, a manufacturer of moderately priced timepieces, would like to introduce a new electronic watch. To compete effectively, Heiko cannot price the watch at more than €30. The company requires a return on investment of 15% on al hew products. The plan is to produce and sell 20,000 watches each year. This would require a €500,000 investment. What is the target cost per watch? a) €26.25 b) €28.00 c) €29.50 d) €30.00

Heiko Company, a manufacturer of moderately priced timepieces, would like to introduce a new electronic watch. To compete effectively, Heiko cannot price the watch at more than €30. The company requires a return on investment of 15% on al hew products. The plan is to produce and sell 20,000 watches each year. This would require a €500,000 investment. What is the target cost per watch? a) €26.25 b) €28.00 c) €29.50 d) €30.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Heiko Company, a manufacturer of moderately priced timepieces, would like to introduce a new electronic watch. To compete effectively, Heiko cannot price the watch at more than €30. The company requires a return on investment of 15% on al hew products. The plan is to produce and sell 20,000 watches each year. This would require a €500,000 investment. What is the target cost per watch? a) €26.25 b) €28.00 c) €29.50 d) €30.00
Transcribed Image Text:Heiko Company, a manufacturer of moderately priced timepieces, would like to introduce a new electronic watch. To compete effectively, Heiko cannot price the watch at more than €30. The company requires a return on investment of 15% on al hew products. The plan is to produce and sell 20,000 watches each year. This would require a €500,000 investment. What is the target cost per watch? a) €26.25 b) €28.00 c) €29.50 d) €30.00
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