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1. 2. (Estimated time allowance: 5 minutes) ECA is currently selling 10,000 tablets a year at a price of $100. The variable costs is $60

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(Estimated time allowance: 5 minutes) ECA is currently selling 10,000 tablets a year at a price of $100. The variable costs is $60 per tablet. The company is introducing higherpriced tablets at a price of $400 and it costs the company $200 to produce it. It is estimated that the annual sales for this higher-priced tablet would be 5,000 units. The company will lose 500 of the existing tablets yearly with the introduction of this new higher-priced tablet. What is the erosion cost from the new tablet? $200,000 $100,000 There is no erosion cost $20,000 $50,000 RET Inc. has decided to manufacture and sell a new line of high-priced commercial mowers. Annual sales for the new line of mowers is estimated at $700,000 a year for each of the next 10 years. The variable costs are 70% of sales and fixed costs are $100,000 annually. A marketing study that cost $1,000,000 done six months ago revealed that introducing this new line of mowers will result in lost sales of existing products of $40,000 a year. The lost sales have a variable cost of $20,000 a year. The plant and equipment required for producing the new line of stoves costs $1,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $400,000 at the end of 10 years. Net working capital incre sses by $300,000 at the beginning of the project (year 0 ) and it is reduced back to its original level in the final year. The tax rate is 20 percent and the discounting rate for the project is 13%. What is the annual Earnings Before Interests, Taxes, and Depreciation/Amortization (EBITDA)? For your answer, round to the nearest dollar, DO NOT use commas to separate thousands; do not use \$ sign symbol, and if figure is negative then use the negative sign ( - ) before the first digit. For example, if your answer is $5,356.70 then enter 5357 ; if your answer is $1,000 then enter -1000

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