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pls help asap RET Inc. has decided to manufacture and sell a new line of high-priced commercial mowers. Annual sales for the new line of
pls help asap
RET Inc. has decided to manufacture and sell a new line of high-priced commercial mowers. Annual sales for the new line of mowers is estimated at $700,000 a year for each of the next 10 years. The variable costs are 70% of sales and fixed costs are $200,000 annually. A marketing study that cost $1,000,000 done six months ago revealed that introducing this new line of mowers will result in lost sales of existing products of $30,000 a year. The lost sales have a variable cost of $10,000 a year. The plant and equipment required for producing the new line of stoves costs $3,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $400,000 at the end of 10 years. Net working capital increases by $300,000 at the beginning of the project (year O) and it is reduced back to its original level in the final year. The tax rate is 40 percent and the discounting rate for the project is 13%. What is the annual Earnings Before Interests, Taxes, and Depreciation/Amortization rate is ao percent and the ng rate for the project is Step by Step Solution
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