Suppose you have just started a business to manufacture your newest invention, the photon gismo. Let's say you believe that after a few years on the market, photon gismos will sell for about $125. This allows for the introduction of similar devices by your competitors. Furthermore, let's say you want to make a profit of $25 on each gismo sold.
1. What is the target cost for the photon gismo?
2. What is the target profit?
3. What is the target price?