CORRECT ANSWER D. FENNELL’S TARGET PRICE IS $268 AS SHOWN BELOW...

279.

Correct answer d. Fennell’s target price is $268 as shown below.

15% after-tax ROI

=

[($3,000,000 + $1,000,000) x .15]

=

$600,000

Per unit ROI

=

$600,000 ÷ 25,000

=

$24

Target price

=

$200 + ($700,000 ÷ 25,000) + [$24 x (1 - .4)]

=

$200 + $28 + $40

=

$268