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Yale case book wrong answer - would like to confirm

Someone asked on Sep 06, 2017 - 1 answer

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.



Anonymous B replied on Sep 06, 2017

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.