there is unused space in the factory. this space can either be rented to another business for $10000 per yearor used to manufacture a new product. the new product would require an in vestment of $875000 in equipment and $155000 in working capital , the latter can be liquidated at the end of the product lifecycle, eight years. the salvage value for the equipment at the end of 8-years is estimated at $105000. the equipment will be placed in the 30% CCA assest pool.

According to m market research, 35000 units of the product can be sold each year. the unit selling price iks $15000 , its variable cost is $30000 and fixed cost is $550000 per year . these figures will remain unchanged throughout the product's lifecycle. the corporate income tax rate is 25% and its cost of capital is 17%. the decision is being made before 2019 tax year.