Heavy Duty Inc

Multiple Choice

Heavy Duty Inc., a manufacturer of power tools, decides to offer a rebate of $100 on its 16-inch mid-range chain saw, which currently has a retail price of $470. Heavy Duty's marketers estimate that, as a result of the rebate, sales of this model will increase from 50,000 to 80,000 units next year. The profit margin for Heavy Duty before the rebate is $150. Based on the given information, is the decision to give the rebate a wise one?

A) Yes, since the benefits are $0.2 million more than the costs.
B) No, since costs are $5.0 million more than benefits.
C) No, since costs are $3.5 million more than benefits.
D) Yes, since the benefits are $1.5 million more than the costs.