Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,000. The marketing group estimates that this rebate will increase sales over the next year from 38,100 to 56,200 vehicles. Suppose Honda's profit margin with the rebate is $6,340 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.)
Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,000. The marketing group estimates that this rebate will increase sales over the next year from 38,100 to 56,200 vehicles. Suppose Honda's profit margin with the rebate is $6,340 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.)
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
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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 $31,000
to $29,000. The marketing group estimates that this rebate will increase sales over the next year from 38,100 to 56,200
vehicles. Suppose Honda's profit margin with the rebate is $6,340 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.)
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