Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $29,200 to $27,200. The marketing group estimates that this rebate will increase sales over the next year from 38,300 to 55,600 vehicles. Suppose Honda's profit margin with the rebate is $6,160 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? Hint: View this question in terms of incremental profits. The cost of the rebate will be $ million. (Round to one decimal place.) The benefit of the rebate will be $ million. (Round to one decimal place.) Is it a good idea? (Select from the drop-down menu.) Offering the rebate look attractive.
Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $29,200 to $27,200. The marketing group estimates that this rebate will increase sales over the next year from 38,300 to 55,600 vehicles. Suppose Honda's profit margin with the rebate is $6,160 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? Hint: View this question in terms of incremental profits. The cost of the rebate will be $ million. (Round to one decimal place.) The benefit of the rebate will be $ million. (Round to one decimal place.) Is it a good idea? (Select from the drop-down menu.) Offering the rebate look attractive.
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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Transcribed Image Text:Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from
$29,200 to $27,200. The marketing group estimates that this rebate will increase sales over the next year from
38,300 to 55,600 vehicles. Suppose Honda's profit margin with the rebate is $6,160 per vehicle. If the change in
sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea? Hint: View this
question in terms of incremental profits.
The cost of the rebate will be $
million. (Round to one decimal place.)
The benefit of the rebate will be $ million. (Round to one decimal place.)
Is it a good idea? (Select from the drop-down menu.)
Offering the rebate
look attractive.
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