Question: Grasscutter Inc. makes a product used to trim lawns. The firm has fixed costs of $100,000 per year. Management expects to sell 2,000 units per year, and at that rate of output, total variable costs will be $50,000. The firm uses cost-plus pricing to earn a target rate of return on an investment of $200,000. If the price is set at $100, what is the target rate of return?