A stock has a correlation with the market of 0.64. The standard deviation of the market is 30%, and the standard deviation of th
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Answer:
Desired profit for the year = $2,329,000
Explanation:
Using the given information, we have
Production volume = 602,000 units
Market price = $34
Operating income desired = 17% of total assets
Total Assets = $13,700,000
Operating income = $13,700,000 17% = $2,329,000
Therefore desired profit = $2,329,000
therefore with this information desired profit per unit = $2,329,000/602,000 = $3.869
Target cost per unit = $34 - $3.869 = $30.131
Desired profit for the year = $2,329,000