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BARA Corporation, a leading men's leather shoe manufacturer in Malaysia has been operating for more than 40 years. Due to new demands and increasing competition,
BARA Corporation, a leading men's leather shoe manufacturer in Malaysia has been operating for more than 40 years. Due to new demands and increasing competition, the company is contemplating to add its product line by manufacturing women's leather shoes. This project requires a big capital because of the difference in the production and marketing of men's and women's shoes. The company needs to expand its factory and renovate its stores. The expected costs are as follows: Sales: 25,000 units of women's shoes are expected to be sold every year at an average price of RM65.00 per unit. At the end of year 5, the processing machine is expected to be sold at a price of RM 140,000. Tax rate is 28% and cost of capital is 10%. Should the company go ahead with the plan? BARA Corporation, a leading men's leather shoe manufacturer in Malaysia has been operating for more than 40 years. Due to new demands and increasing competition, the company is contemplating to add its product line by manufacturing women's leather shoes. This project requires a big capital because of the difference in the production and marketing of men's and women's shoes. The company needs to expand its factory and renovate its stores. The expected costs are as follows: Sales: 25,000 units of women's shoes are expected to be sold every year at an average price of RM65.00 per unit. At the end of year 5, the processing machine is expected to be sold at a price of RM 140,000. Tax rate is 28% and cost of capital is 10%. Should the company go ahead with the plan
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