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Dons, a chain of supermarkets, has entered into an agreement [#permalink]
08 Jul 2008, 13:53
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Dons, a chain of supermarkets, has entered into an agreement in which Rose Computers will sell Dons an unlimited number of its least expensive PCs at one-fourth the regular wholesale price. In return, Dons has agreed to purchase all of its scanners and other electronic information-processing equipment from Rose or from Omicron, Rose Computers parent company, for the next ten years. Dons will offer a Rose PC free to any school that turns in Dons register receipts totaling $100,000 within the next six months. The vice-president in charge of advertising for Dons expects that the computer giveaway will obviate the need for a massive new advertising campaign for the next six months and that Dons can make up the expenditures for the PCs by writing them off its income taxes as charitable donations. The plans formulated by Dons assume each of the following EXCEPT:
A. The prices that Rose or Omicron charges Dons for information-processing equipment over the next ten years will be lower than those charged by other companies.
B. The tax laws will not be changed to exclude or lessen the value of charitable donations as tax write-offs.
C. Schools will be sufficiently attracted by Dons computer giveaway offer that teachers will urge students to shop at Dons.
D. Rose will be able to supply Dons with a sufficient number of PCs to meet the demand generated by schools that collect Dons receipts totaling $100,000.
E. The effect of the computer giveaway offer on Dons business will be comparable to that of a major advertising campaign.
B. Yes this assumption is required else the calculations done by Dons will change. C.Yes this is also required else how will the giveaway scheme will replace the add campaign. D. Yes this assumption us also required else what the point in having the scheme. E. Yes this is the basic assumption which Dons is taking along and replacing the add campaign with give away scheme.