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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

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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%

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