Molecugen has developed a new kind of cardiac diagnostic unit .Owing to the highly competitive nature of the market . the sales department forecasts demand of 5,000 units in the first year and a decrease in demand 10% a year after that .After 5 years ,the project will be discontinued with no salvage value. The marketing department forecasts a sales price of $15 a unit .Production estimates operating costs of $5 a unit, and the finance department estimates general and administrative expenses of 15,000 a year .The initial investment in land is 10,000 and other no depreciable setup costs are 10,000

A) Is the new project acceptable at a cost of capital of 10%(use straight line depreciation over the life of the project and a tax rate of 35%

B ) if the marketing department had forecast a decline of 15% a year in demand ,would the project be acceptable

C) if the market department had forecast a decline in sales price of 10% a year ,along with the 15% annual decline in demand predicted in b would the project be acceptable?

D )If the prices decline by 10% a year ,the marketing department estimates that demand will be a constant 5,000 units a year .Is the project acceptable.?

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