Ewiase Co Ltd is considering the introduction of a new product with the following cost and revenue structure:

1. The product will be sold for GH1,000 per unit.
2. A machinery costing GH 1 million would be required with a useful life of 8 years with zero residual value at the end of the period
3. Working capital requirements are estimated at GH250,000.
4. Variable costs per unit is estimated at GH800 and fixed costs per annum other the depreciation and development expenditure stood at GH300,000.

The following additional information is available:

1. The research department had developed the new product at a cost of GH500,000. There is known to be a strong demand for the product and this demand will last for 5 years and then collapse due to forecast technological change.
2. The maximum production capacity is 6000 units per annum. The sales director is confident that the company will be able to sell all the items produced. The finance director disagrees and points out that the company rarely managers to operate at more than 90% capacity and that, anyway, the company is unlikely to be able to sell more than 5000 units per annum.

Required:

Calculation of :

1. The annual level of sales in units, required to produce a return of 20% per annum of the original investment.
2. The annual profit, assuming maximum production
3. The margin of safety as a ratio