Schweser Satellites inc, produces satellite earth stations that sell for $100,000 each. The firm's fixed costs, F, are $3million,50 earth stations are produced and sold eac year, profits total $400,000, and the firm's assets fall equity financed) are $4 million. The firm estimates that it can change its production procecs, adding $3 milion to assets and $600,000 to foxed operating costs. This change will reduce variable costs per unit by $12,000 and increase output by 20 units. However, the sales price on all units must be lowered to $90,000 to permit sales of the additional output. The firm has tax loss carryforvards that render its tax rate zero, is cost of equity is 15%, and it uses no debt. 3. What is the incremental profit? Enter your answer in dollart. For example, an answer of $4 millon should be entered as 4,000,000, not 4. Round your answer to the nearest dollar. 5 To get a rough idea of the project's profitablity, what is the project's expected rate of retum for the next year (defined as the incremental profit divided by the investment)? Round your anower to two decimal places. Should the firm make the investment? since the project's expected rate of retum for the next year the cost of equity. b. Would the firm's breakeven point increase or decrease if it made the change? The change would the breakeven point. Would the new situation expote the firm to more or less business nok than the cid one? 1. The new stuation would obvously have less business nsk then the old one. 11. It is impossble to state unequrocaly whether the new station would have more of less business risk thas the old one. 111. The new situat on wpuld obviously have more business risk than the old one