A company that manufactures recreational pedal boats has approached Brian Cichanowski to ask if he would be interested in using Current Designs' rotomold expertise and equipment to produce some of the pedal boat components. Brian is intrigued by the idea and thinks it would be an interesting way of complementing the present product line. One of Brian's hesitations about the proposal is that the pedal boats are a different shape than the kayaks that Current Designs produces. As a result, the company would need to buy an additional rotomold oven in order to produce the pedal boat components. This project clearly involves risks, and Brian wants to make sure that the returns justify the risks. In this case, since this is a new venture, Brian thinks that a 12% discount rate is appropriate to use to evaluate the project. As an intern at Current Designs, Brian has asked you to prepare an initial evaluation of this proposal. To aid in your analysis, he has provided the following information and assumptions. 1 2 The new rotomold oven will have a cost of $241,000, a salvage value of $0, and an 8-year useful life. Straight-line depreciation will be used. The projected revenues, costs, and results for each of the 8 years of this project are as follows. Sales Less: Manufacturing costs Depreciation $130.600 30 125 $207,600