Honda Motor Company is considering offering a $1,900 rebate on its minivan, lowering the vehicle's price from $30,900 to $29,000. The marketing group estimates that this rebate will increase year from 41,100 to 53,600 vehicles. Suppose Honda's profit margin with the rebate is $5,610 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and 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 $1,900 rebate on its minivan, lowering the vehicle's price from $30,900 to $29,000. The marketing group estimates that this rebate will increase year from 41,100 to 53,600 vehicles. Suppose Honda's profit margin with the rebate is $5,610 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and 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 Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 3P

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Honda Motor Company is considering offering a $2,100 rebate on its minivan, lowering the vehicle's price from $29,000 to $26,900. The marketing group estimates that this rebate will increase sales over the next year from 41,500 to 55,400 vehicles. Suppose Honda's profit margin with the rebate is $6,580 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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