Dursley Ltd is a research business that has invested pound

70,000 to date in developing a new type of cream to arrest the effects of ageing on the skin. The research has not been entirely successful as there has been no interest in the new cream from healthcare businesses.Recently, however, a cosmetics business has made enquiries about the cream and its potential as a sun blocker.

Dursley Ltd believes that there is such potential for thecream; however, further research would have to be carried out. The business would have to extend the research contracts of two research chemists for a further year at a total cost of pound

80,000. The research chemists are due to be made redundant at a total cost of pound

30,000. However, if the contract is extended the total redundancy cost will be pound

40,000 at the end of the contract.

The further research that will have to be carried out will take up one quarter of the laboratory space available within the business. The business rents the laboratory at an annual cost of pound

60,000 per year.

What is the minimum price that Dursley Ltd could charge the cosmetics business to justify the additionalresearch? (Ignore the time value ofmoney.)

A.90,000

B.135,000

C.105,000

D.205,000

Why the final charge ignore the additional rent cost