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Don s, a chain of supermarkets, has entered into an [#permalink]
05 Sep 2005, 07:44
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Donâ€™s, a chain of supermarkets, has entered into an agreement in which Rose Computers will sell Donâ€™s an unlimited number of its least expensive PCâ€™s at one-fourth the regular wholesale price. In return, Donâ€™s has agreed to purchase all of its scanners and other electronic information-processing equipment from Rose or from Omicron, Rose Computersâ€™ parent company, for the next ten years. Donâ€™s will offer a Rose PC free to any school that turns in Donâ€™s register receipts totaling $100,000 within the next six months. The vice-president in charge of advertising for Donâ€™s expects that the computer giveaway will obviate the need for a massive new advertising campaign for the next six months and that Donâ€™s can make up the expenditures for the PCâ€™s by writing them off its income taxes as charitable donations.
The plans formulated by Donâ€™s assume each of the following EXCEPT:
(A) The prices that Rose or Omicron charges Donâ€™s 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 Donâ€™s computer giveaway offer that teachers will urge students to shop at Donâ€™s.
(D) Rose will be able to supply Donâ€™s with a sufficient number of PCâ€™s to meet the demand generated by schools that collect Donâ€™s receipts totaling $100,000.
(E) The effect of the computer giveaway offer on Donâ€™s business will be comparable to that of a major advertising campaign.