NordicTrack offers two models of exercise bikes: S15i and the S221. The prices of the models are: $1599 and $1999 respectively. The variable costs for these models are: $400 and $525 respectively. The demand projected for each model for next year are: 45,500 and 35,000 units. Suppose they are now considering the addition of another product called the S191"priced at $1799 with a variable cost of $480. NordicTrack expects that they will sell 24,000 units of| the new product next year. Sixty percent of the sales will be from cannibalization: 20% of the volume will be from the S15i and 40% will be from the S22i. The other 40% will come from market growth. The marketing costs for the S19i will be $20M and design costs will be $5M. co a Should NordicTrack launch the S1912 Show your calculations. [10] b. Suppose that in year 2, sales of the S15i and S22i increase by 17% and 12%, respectively. If the S19i was launched in the first year, then it is expected that the demand in the second year will increase to 35,000 units. Marketing costs in the second year for the S19i will be $10M. Assuming that of that volume in the second year the following percentages of S19i sales were cannibalized from the others: 25% and 35% respectively. Would your decision from part (a) change? [10] C. Imagine that in the third year, Peloton launches a bike that competes with the S22i and takes some sales from it, Demand projections for the S15i and S22i are 54,000 and 34,000. Material costs are projected to increase variable costs by 7%. To keep up with inflation and add a small buffer, NordicTrack plans to increase prices by 10% on all bikes. If they still have the S191 in the third year, they expect to sell about 30,000 units. Cannibalization rates would change to 15% and 20% of the S19i volume to be taken from the S151 and S22i, respectively. Marketing costs for the S19i would be reduced to $7,5M in the third year. Considering all three years, would your decision be? [10]