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Company iLoveCoffee.com is contemplating a new project. It wants to make a programmable smart coffee machine such that it'll make coffee with cream and/or sugar
Company iLoveCoffee.com is contemplating a new project. It wants to make a programmable smart coffee machine such that it'll make coffee with cream and/or sugar to the taste of each individual. It spent $100,000 this past year on market research to determine demand for such a product and the price at which to sell the product. The company already has space to manufacture this smart coffee maker. However, if they don't use this space to make the new coffee maker, they can rent the space out for $12,000 a year. In order to get the space ready for manufacturing, the company would have to purchase equipment for $200,000. It'll cost $10,000 to get it shipped, and another $30,000 to get it installed. This project is expected to last 4 years. The firm has determined that it can depreciate its new equipment using 3-year MACRS. The firm believes it can sell the equipment at the end of 4 years for $24,000. The firm estimates that it will sell 1,200 coffee machines per year for the next 4 years at a price of $200 each in year 1. The cost of per unit is expected to be $95, and the annual SG
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