The Baldwin company will sell 100 units (x1000) of capacity from their Buddy product line. Each unit of capacity is worth $6 plus $4 per automation rating. The Baldwin company will sell the capacity for 35% off. How much do they receive when the capacity is sold?

Amount received = $2,210,000

Explanation:

given data

sell = 100 units (x 1000)

capacity = $6 + $4 per automation rating

sell capacity = 35%

to find out

how much they receive when the capacity is sold

solution

we consider here Automation rating is 7.0

we get here first Cost per unit that is here as

Cost per unit = 6 + 4 * 7

Cost per unit = 34

and capacity worth will be here as

capacity worth = Cost per unit * sell units

capacity worth = 34 * 100000

capacity worth = 3,400,000

so that here Amount received will be as

Amount received = capacity worth * (1 - sell capacity)

Amount received = 3400000 * (1 - 35%)

Amount received = $2,210,000