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please assist i need help v A company is trying to decide which of two new product lines to introduce in the coming year. The
please assist i need help v
A company is trying to decide which of two new product lines to introduce in the coming year. The company requires a 12% return on investment. The predicted revenue and cost data for each product line follows: Product A Product B Unit sales 20,000 25,000 Unit sales price $30 $30 Direct materials $8,000 $15,000 Direct labor $80,000 $120,000 Other cash operating expenses $25,000 $30,000 New equipment costs $1,500,000 $2,500,000 Estimated useful life (no salvage) 5 years 5 years The company has a 30% tax rate and it uses the straight-line depreciation method. Compute the net present value given the 12% discount rate (given above) for each piece of equipment under each of the two product lines. Which, if either, of these two investments is acceptable? 1565 30,000 New equipment costs $1,500,000 $2,500,000 Estimated useful life (no salvage) 5 years 5 years The company has a 30% tax rate and it uses the straight-line depreciation method. Compute the net present value given the 12% discount rate (given above) for each piece of equipment under each of the two product lines. Which, if either of these two investments is acceptable? Project A O Project B None of the projects are desirable The Projects are equally desirable. Need more information to make decision Step by Step Solution
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