Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Abitibi Pulp Ltd. is considering a new product line for its existing table business. It has developed a new type of computer table that will
Abitibi Pulp Ltd. is considering a new product line for its existing table business. It has developed a new type of computer table that will protect the computer during an earthquake. It would like you to analyze the feasibility of the venture and suggest a break-even bid price based on the following: Marketing analysis indicates technology companies in Silicon Valley will buy 250 tables each year for 4 year The consultant who did the marketing research charged a fee of $15,000. .The firm estimates that the variable cost per table is $100. For this project, the firm would require additional factory space at an annual cost of $25,000 with overhead, such as heating & lighting costs, amounting to $4,000 per year and wages & salaries totaling $75,000/ year. .The machinery required for the new product line would cost $200,000 and have a salvage value of $50,000 at the end of the project. The machinery belongs to CCA class 16 which has a 15% declining balance rate. Additional working capital of $150,000 would be required to get the project started with 80% recovery at the end The corporate tax-rate is 30% and the required rate of return is 12%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started