Question
This is a one year project to produce and sell tennis shoes. The fixed cost of building a factor is 35,000. You expect to sell
This is a one year project to produce and sell tennis shoes. The fixed cost of building a factor is 35,000. You expect to sell each pair of tennis shoes at a price of 10. The profit margin is 60%. The market size for such shoes is 100,000 pairs of tennis shoes (one hundred thousand). Your strategy is to take 10% of the market share. The opportunity cost of capital is 10%. Obtain the net present value (NPV) for this project (up to two decimal places). Show all work and explain your logic/rationale. Will you invest in this project based on the NPV decision rule? Briefly explain.
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