1. Suppose an athletic shoe company is considering introducing a new shoe, which will sell for $125 a pair.They currently make a shoe that sells for $115 a pair, which they will continue making and selling.The new shoe is projected to sell 100,000pairs each year for the next 4years,after which the entire product line will be updated and replaced.The firm has already spent $1.3million developing and designing the new shoe, and the new shoe will start off byhaving a special advertising campaign (over and above the regular marketing that all shoes at the firm get)that costs $3.5 million,before any sales are made.The variable cost per pair is $50for the new shoe and $45for the current shoe.Each shoe has fixed costs of $1 million per year,which includes marketing and administrative overhead.After the introduction of the new shoe,the current shoe's sales are expected to drop from 95,000pairs per year to 50,000pairs per year,because many customers will choose to buy the new shoe instead of the old one.Determine whether the new shoe is worth introducing,assuming that the appropriate discount rate is 11% and the firm faces a tax rate of 28%.