1. GamesWorld Inc. markets personal computer games directly to consumers. Presently, GamesWorld is faced with a decision as to whether it should obtain the distribution rights to a new technology for personal computer gamers. The new game consists of the Daytona game console, driver seat pad, and control unit with cable (one of each is required to play the game).

Other data available are as follows:

Daytona Software License (per year)..................................................$100,000

Annual interest payments..................................................................... $50,000

Depreciation Costs (per year)................................................................$25,000

Annual Overhead (per year) ...............................................................$150,000

Annual Advertising and promotion..............................................................$100

Royalties for Daytona Game (per game).................................................. $10

Control Unit and Cable (per unit)................................................................... $5

Material & Labor (per unit)..................$17

Retail price of the game package $172

1. What is the retail price of the Daytona game package?
2. What is VCIs unit contribution?
3. What is the break-even point in units?
4. Assuming the market size is 5,000 units, what is the break-even market share?
5. Assuming your company projects that the new product will obtain 12% market share, should you launch the new product?