The satisfied owner of a new $15,000 car can be expected to buy another ten cars from the same company over the next 30 years (an average of one every three years) at an average price of $15,000...

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The satisfied owner of a new $15,000 car can be expected to buy another ten cars from the same company over the next 30 years (an average of one every three years) at an average price of $15,000 (ignore the effects of inflation). If the net profit margin on these cars is 20 percent, how much should an auto manufacturer be willing to spend to keep its customers satisfied? Assume a 9 percent discount rate.



Answered Same DayDec 25, 2021

Answer To: The satisfied owner of a new $15,000 car can be expected to buy another ten cars from the same...

David answered on Dec 25 2021
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The satisfied owner of a new $15,000 car can be expected to buy another ten cars from the
same com
pany over the next 30 years (an average of one every three years) at an average
price of $15,000 (ignore the effects of inflation). If the net profit margin on these cars is 20
percent, how much should an auto manufacturer be willing to spend to keep its customers
satisfied? Assume a 9 percent discount rate.
ANSWER
Annuity earned every 3 years for the nest 30 years= 15000*20% = $3000
Discount...
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