Assignment FM (1) (Protected View)-Word REFERENCES MAILINGS REVIEW VIEW contain viruses. Unless you need to edit, it's safer to stay in Protected View.Enable Editing Harmaz Holding menuactures a range of electric hand tools which ore sold to specialist retailers and fool hire companies. The company's accounting year end is 31 Deoember. For investment apprisol purposes, the director arTenty use n discount rate of 10% per onurn, which the fnance director has oaloulaled using the capital assef pricing model The companys principle objectives is to maximize shareholkder vakue For some years the company hes been successfully selling a heavy duty couler saw, the Gergai, but last year the compeny's two major competitors introduces innovative new products which threaiened the market shere of the Gergej. In view of this, the directors of Harraz Holding are considering two strategic optors Option 1 To cense production and sale of the Gerga on 31 December 2018 and replace it with from 1 Jenuary 2019 with a new product, the Diamond, which has been developed during the last six months. Full product development oost amounted to $325,000 of which $100,000 is stil to be paid on 31 December 2018. Sales of the Diamond in subsequent years are expected to be as follows The marketing director has caleulsted these projected sales figures could be achieved at a selling price of $120 per unit, with variable production costs expected to be $48 per unit incremental foxed costs $300,000 per annum and allocated head office fioxed costs $50,000 per annum Option 2 To introduce the Diamond on 1 January 2019 and retain the Gergaji as the marketing director believes that there are still be demand in certain market segments for the cheaper Gergaji for a maximum of three years If the Gergaji is retained for three years, then based on a seling price of $96 per unit, sales are forecast to be 4.800 units in 2019, 3,800 in 2020 and 2,400 units in 2021. However, he slso pointed out that the sales of Gerga would diminish sales of the Diamond in those three years by one unit for every two units of the Gergaj sold The Gergaji has an estimated $54 per unit variable cost element and has associsted incremental fioxed costs of $20,000 per annum Assignment FM (1) (Protected View)-Word REFERENCES MAILINGS REVIEW VIEW contain viruses. Unless you need to edit, it's safer to stay in Protected View.Enable Editing Harmaz Holding menuactures a range of electric hand tools which ore sold to specialist retailers and fool hire companies. The company's accounting year end is 31 Deoember. For investment apprisol purposes, the director arTenty use n discount rate of 10% per onurn, which the fnance director has oaloulaled using the capital assef pricing model The companys principle objectives is to maximize shareholkder vakue For some years the company hes been successfully selling a heavy duty couler saw, the Gergai, but last year the compeny's two major competitors introduces innovative new products which threaiened the market shere of the Gergej. In view of this, the directors of Harraz Holding are considering two strategic optors Option 1 To cense production and sale of the Gerga on 31 December 2018 and replace it with from 1 Jenuary 2019 with a new product, the Diamond, which has been developed during the last six months. Full product development oost amounted to $325,000 of which $100,000 is stil to be paid on 31 December 2018. Sales of the Diamond in subsequent years are expected to be as follows The marketing director has caleulsted these projected sales figures could be achieved at a selling price of $120 per unit, with variable production costs expected to be $48 per unit incremental foxed costs $300,000 per annum and allocated head office fioxed costs $50,000 per annum Option 2 To introduce the Diamond on 1 January 2019 and retain the Gergaji as the marketing director believes that there are still be demand in certain market segments for the cheaper Gergaji for a maximum of three years If the Gergaji is retained for three years, then based on a seling price of $96 per unit, sales are forecast to be 4.800 units in 2019, 3,800 in 2020 and 2,400 units in 2021. However, he slso pointed out that the sales of Gerga would diminish sales of the Diamond in those three years by one unit for every two units of the Gergaj sold The Gergaji has an estimated $54 per unit variable cost element and has associsted incremental fioxed costs of $20,000 per annum