Problem 3-10 (Algo) The Tuff Wheels was getting ready to start its development project for a new product to be added to its small motorized vehicle line for children. The new product is called the Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The following table contains the relevant information for this project. Development cost $700,000 Estimated development time 9 months Pilot testing $200,000 Marketing and support cost Ramp-up cost Sales and production volume Unit production cost Unit price Interest rate $400,000 $150,000 per year 60,000 per year $ 100 $ 150 8 % Tuff Wheels also has provided the project plan shown as follows. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created.