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You have been hired as a capital budgeting analyst by a sporting goods firm that manufactures athletic shoes and has captured 1 0 % of
You have been hired as a capital budgeting analyst by a sporting goods firm that manufactures athletic shoes and has captured of the overall shoe market the total market is worth $ million a year The fixed costs associated with manufacturing these shoes are $ million a year, and variable costs are of revenues. The companys tax rate is The firm believes that it can increase its market share to by investing $ million in a new distribution system which can be depreciated over the systems life of years to a salvage value of zero and spending $ million a year in additional advertising. The company proposes to continue to maintain working capital at of annual revenues. The discount rate to be used for this project is
How much would the firms market share would have to increase for you to be indifferent to taking or rejecting this project? Please answer in terms of percent increase
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