Could you use the information I gave you to fill in the INPUT chart
Appendix 1: Tiny Tread project Last quarter, the company's marketing team has conducted a $5 million marketing test that suggests that there is a significant market for a Tiny Tread-type tire. If implemented, the Tiny Tread would be put on the market next year and Badmonth expects it to stay on the market for four years. Research and development costs to date total $10 million. Further, to move forward, Badmonth must invest $30 million in production equipment today. The equipment is expected to have a four-year useful life, with a zero-salvage value. Tiny Tread will be sold to the Original Equipment Manufacturer (OEM) Market. The OEM market consists primarily of large automobile companies (e.g. GM, Toyota) who buy tires for new cars. In the OEM market, the Tiny Tread is expected to sell for $30 a tire. Each new car needs four new tires (not 5 as the spare tires in each new car are undersized and fall into a different product category). The variable cost to produce each tire is $18 (and the variable cost is expected to increase with inflation). Badmonth intends to raise tire prices at 1% above the inflation rate each year. In addition, the Tiny Tread project will incur $7.5 million in marketing and general administration costs the first year (an amount that is expected to increase at the inflation rate in subsequent years). Annual inflation is expected to remain constantat 3.25%. You also know that you have to consider net working capital requirements. The immediate initial net working capital requirement is $5.5 million. After that, the networking capital requirement will be 15% of the next year's estimated total sales revenue. Automotive industry analysts expect automobile manufacturers to produce 2.1 million new cars next year and believe that production will grow by 2.5% per year thereafter. Badmonth Tires expects the Tiny Tread to capture 15% of the OEM market. Badmonth's corporate tax rate is 21%. The company uses straight-line depreciation. Also, based on our estimation, the company should use a 7.5% discount rate to evaluate new product decisions. INPUT Disc. Rate Tax rate Inflation OEM Price VC SG&A