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# Don s, a chain of supermarkets, has entered into an

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Manager
Joined: 29 Sep 2006
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Don s, a chain of supermarkets, has entered into an [#permalink]

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12 Nov 2006, 17:31
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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.

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Manager
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12 Nov 2006, 17:34
E....

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VP
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12 Nov 2006, 19:50
A seems to be the answer for me.

No where in the argument, did the author talk about the price of information-processing equipment. The argument only mentions that Don's is going to buy for 10 years from rose.
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Director
Joined: 06 Feb 2006
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13 Nov 2006, 00:04
A...

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Director
Joined: 17 Jul 2006
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13 Nov 2006, 10:55
ak_idc wrote:
A seems to be the answer for me.

No where in the argument, did the author talk about the price of information-processing equipment. The argument only mentions that Don's is going to buy for 10 years from rose.

Exactly for the same reasoning AAAAAA

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Schools: Wharton (R2 - submitted); HBS (R2 - submitted); IIMA (admitted for 1 year PGPX)

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13 Nov 2006, 11:32
ak_idc wrote:
A seems to be the answer for me.

No where in the argument, did the author talk about the price of information-processing equipment. The argument only mentions that Don's is going to buy for 10 years from rose.

Agreed. But we need to find an assumption - which would anyway NOT be stated in the stem.

Would it not be required of Don's to assume that, in order to ensure profitability, the prices they would be paying for electronic processing equipment over the next 10 years would be lower than that which companies other than Rose or Omicron would charge them?

I chose D - because the question of assuming that there would be enough computer supply does not arise as the stem says that Don's would be getting infinite number of inexpensive PC's.

I have seen this que in 1000 SC and the answer given there is A. However I'd like for someone to punch holes in the logic above.

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13 Nov 2006, 11:32
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# Don s, a chain of supermarkets, has entered into an

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