Question
X Company is considering producing and selling a new product. After conducting a market research study that cost $4,600, company estimates are that sales of
X Company is considering producing and selling a new product. After conducting a market research study that cost $4,600, company estimates are that sales of the product will be 8,300 units in each of the next four years, contribution margin per unit will be $6.10, and annual fixed costs will be $16,790.
In order to produce the new product, additional equipment would have to be purchased, costing $120,000, with no salvage value at the end of four years.
What is the internal rate of return of producing and selling this new product? [Submit your rate as a decimal: .XX]
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