New Product Development Project The marketing team has identified a major new product sales opportunity. The customer estimates about 200 thousand lbs. of incremental sales / year potential for a new application they are commercializing. This will take the total product sales to 1.2 MM lbs./year at $1.50 Selling Price. While it is pretty sure this will go, there is some risk to the project on the customer side - the commercial team wants to drop price to $1.45 for all the volume which they feel will secure the business. As the New Product Engineer in the business you have been asked to do a financial assessment for the development and scale-up costs. Your generate the following Development: Compounding Lab $50K Extrusion Trials $200K Application Engineer $100K Product Design: Use an existing grade with $1.00/lb. variable manufacturing cost - 25% fixed and 75% variable. Is this a good investment for the business to make returning >25% ? What is the lowest selling price required to get at 25% return? The business rates projects over 5 years of cash flow