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	$	1,200,000
Estimated development time		9	months
Pilot testing	$	200,000
Ramp-up cost	$	400,000
Marketing and support cost	$	150,000	per year
Sales and production volume		60,000	per year
Unit production cost	$	100
Unit price	$	200
Interest rate		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.

PROJECT SCHEDULE YEAR 1 YEAR 2 YEAR 3 YEAR 4 KIDDY DOZER QI Q1 Q1 Q4 Development Pilot Testing Ramp-up Marketing and Support Production and SalesPROJECT SCHEDULE YEAR 1 YEAR 2 YEAR 3 YEAR 4 KIDDY DOZER QI Q1 Q1 Q4 Development Pilot Testing Ramp-up Marketing and Support Production and Sales