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Direct labor, materials, selling expenses, and other variable costs are forecast to be $5.20, $3.05, $2.30, and $0.80, respectively in year 1 and grow with
Direct labor, materials, selling expenses, and other variable costs are forecast to be $5.20, $3.05, $2.30, and $0.80, respectively in year 1 and grow with ination. Lease payment, property taxes, administration, advertising, and other cash xed costs are expected to be $6,100, $1730, $4680, $2,120, and $2730, respectively in year 1 and grow with ination. What are the Total Variable Cost per Unit and Total Cash Fixed Costs in year 7? PART III: Consider the same problem as in Part II. Assume that the product lifecycle of seven years is a reasonable bet, but you are concerned about the real demand for your product. This is a fairly new product, and demand may be more or less than your sales team believes. Further, if this (and other) risky projects take longer than expected, the rm's cost of capital may increase (because you are a 'riskier' borrower to your creditors)
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