Smith and Company is considering adding a bike to its current product line. John, the...
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Smith and Company is considering adding a bike to its current product line. John, the top manager believes that in order to be competitive, the bike cannot be priced above $139. The company requires a minimum return of 25% on its investments. Launching the new bike would require an investment of $8,000,000 and sales are expected to be 40,000 units of the bike per year. Compute the target cost of a bike. What does this target cost mean for Smith and Company?
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