Assume your firm manufactures millions of hard drives

Reference no: EM1332225

Calculating Dell's Profit Increase

Suppose your firm manufactures 3 million hard drives per year specifically for Dell laptop computers. Suppose your average variable cost C=$20/unit, annualized cost of investment to build a hard drive factory I=$30 million, and the market price (bailout market price in the event Dell does not buy) Pm=$22/unit. If Dell agrees to purchase the 3 million hard drives at a price P*=$30.2/unit and subsequently renegotiates to only purchase for $26.8/unit, how much has Dell increased its own profits?

Reference no: EM1332225

Questions Cloud

Attracting applicants for police agencies : What are the recruitment strategies to attract diverse applicants for a police agency?

Find the security''s default risk premium : A particular security's equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 1.75 percent and the real interest rate is 3.5 percent. Find the security's default risk premium

What challenges might managers face : Check three nonfinancial segments of total reward and What challenges might managers face in implementing such segments?

Expalain a programming language is machine independent : What does it mean that a programming language is strongly typed.

Assume your firm manufactures millions of hard drives : Assume your firm manufactures 3 million hard drives per year specifically for Dell laptop computers and subsequently renegotiates to only purchase for $26.8/unit, how much has Dell increased its own profits

Explain what are some best managerial practices : Explain what are some best managerial practices that facilitate e-Business success

Show the organizational structure in a restaurant : Organizational Structure in a Restaurant - Restaurant has problems with its human resource management, training, operations, and organization design.

The supply and demand for air travel : Florida Citrus Mutual, an agricultural cooperative association for citrus growers in Florida, needs to predict what will happen to the price and output of Florida oranges under the conditions below. What are your predictions?

Explain how would you justify the long-term nature : Explain how would you justify the long-term nature of your contract with CGI Group.

User Account

All Pages