Reconsider the lecture example regarding middletown, Ask an Expert

Management Studies

Reconsider the lecture example regarding Middletown Community College. The college has decided not to rent vending machines but instead to buy them. X Company will sell machines to Middletown and promises to buy them back in four years. Assume that Middletown's annual profit equation for the snack operation is $0.11(X) - $72,700, where X is the number of snack items sold. Middletown expects to sell 770,000 snack items in each of the next four years. X Company is willing to negotiate the purchase price with Middletown, but it promises to purchase the machines back in four years for $2,500. Assuming Middletown wants a 8% return on this investment, what is the most they can pay for the vending machines?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93122841

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