Question
The Research and Development (R&D) department of Boswell Electronics Company (BEC) has developed a voice-recognition system that could lead to greater acceptance of personal computers
The Research and Development (R&D) department of Boswell Electronics Company (BEC) has developed a voice-recognition system that could lead to greater acceptance of personal computers among the Japanese. Currently, the complicated and voluminous set of Japanese characters required for keyboard make it unwieldy and bulky in comparison to the trim, easily portable keyboards, to which Westerners are accustomed. Boswell has used voice-recognition systems in more traditional settings, such as medical reporting in the English language. However, adapting this technology to the Japanese language could result in a breakthrough new level of acceptance of personal computers in Japan. The investment required to develop a full-scale commercial version would cost BEC $10 million, which will be financed at an interestrate of 12%. The system will sell for about $4000 (or net cash profit of $2000) and run on high-powered PCs. The product will have a 5-year market life. Assuming that the annual demand for the product remains constant over the market life, how many units does BEC have to sell each year to pay off the initial investment and interest?
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