Business, 05.05.2020 16:42 shadowselena63

You are planning on selling a new product that has a variable cost of $62 a unit. Your monthly required return is 1.8 percent. To help boost your sales, you plan to offer new customers one month to pay. You expect that of 100 customers who purchase the product today, all will take advantage of the credit offer. However, 12 of them will not pay one month from now, while 88 will be so happy with the product that they, and their offspring, will purchase replacement products and pay for them on a monthly credit basis forever. The selling price and variable cost will not change and the variable cost will be incurred at the time of sale.
Required: What is the minimum price the firm could charge to break-even on an Net Present Value basis?

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You are planning on selling a new product that has a variable cost of $62 a unit. Your monthly requi...

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