Hi, There is a case on Yale case book, the answer says: "Our client will save $6,000/year in costs and suffer a maximum reduction of $1,500/year in profits. This is a net gain of $4,500/year". Just want to clarify this statement is wrong. The net gain should be 1500/year, not 4500/year.
Thanks
Freda
Hi Freda,
I disagree with your interpretation.
Look at both components individually:
If you save $6000 in costs, your net gain is $6k.
If you lose $1.5k in profits, your net loss is $1.5k.
Add both numbers and find the answer to be correct.
Best
Björn
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