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For a new product, sales volume in the first year is estimated to be 58,000 units and is projected to grow at a rate of
For a new product, sales volume in the first year is estimated to be 58,000 units and is projected to grow at a rate of 6.6% per year. The selling price is $100 and will increase by $10 each year. Per-unit variable costs are $20.50 and annual fixed costs are $1,000,000. Per-unit costs are expected to increase by 4.5% per year. Fixed costs are expected to increase 10% per year. Develop a spreadsheet model to predict the net present value of profit over a three-year period, assuming a 4% discount rate.
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