Question
Kaki Inc. is planning to introduce a new line of higher-priced vaccum cleaners. It is estimated that the annual sales for this higher-priced units would
Kaki Inc. is planning to introduce a new line of higher-priced vaccum cleaners. It is estimated that the annual sales for this higher-priced units would be 2,000 units and a price per unit of $1,900. It would cost the company $800 to produce each unit. Kaki Inc. has one existing line of low-priced vaccum cleaners. Kaki is currently selling 10,000 low-priced units a year at a price of $460. The variable costs is $100 per unit. It is estimated that the sales of the existing low-priced vaccum cleaners will go up by 250 units a year with the introduction of the new higher-priced unit. What is the value of the synergies to be considered when estimating the OCFs for the new higher-priced vaccum cleaner project?
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