PROBLEM 2.

They are considering introducing a new product. A sales volume of 5,000 units per year is expected for 5 years. The selling price will be $ 300 and the unit variable costs will be $ 120. To manufacture this new product it will be necessary to invest in machinery with a cost of $ 1,500,000 with a useful life of 5 years without scrap value. Depreciation is through a 20% tax rate. Annual out-of-pocket fixed costs will be $ 400,000 per year. In addition, you must make an investment in inventory for the new product which you will recover at the end of the project. Said investment will be $ 60,000. The company has a MARR of 10%. Tax rate 25%.

a) Determine the annual investment, recovery and operation flows.

b) Determine the net present value of the project.

c) Keeping prices and costs the same, how many units does he have to sell to achieve exactly 10% rate of return?

d) The Marketing department states that an advertising campaign is necessary to position the product in the market. Said advertising campaign would have an annual cost of $ 50,000. Assuming sales are 5,000 units, what could be the unit margin to achieve exactly 10% rate of return?

a) Determine the annual investment, recovery and operation flows.

b) Determine the net present value of the project.

c) Keeping prices and costs the same, how many units does he have to sell to achieve exactly 10% rate of return?

d) The Marketing department states that an advertising campaign is necessary to position the product in the market. Said advertising campaign would have an annual cost of $ 50,000. Assuming sales are 5,000 units, what could be the unit margin to achieve exactly 10% rate of return?