Answer:
$525
Explanation:
Given that,
Each specialized bike purchased includes free maintenance service for 12 months,
Price of the specialized bike = $700
When sold separately,
Maintenance contract = $200
Comparable but non-specialized bike = $600
Total value = $200 + $600
= $800
The whole price of the specialized bike will be based on the ratio of maintenance contract and the individual prices of non specialized bikes.
Revenue from the sale of bike:
= Price of the specialized bike × (Price of non specialized bike ÷ Total amount)
= $700 × ($600 ÷ $800)
= $700 × 0.75
= $525
