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You have been hired as a consultant for Pristine Urban - Tech Zither, Inc. ( PUTZ ) , manufacturers of fine zithers. An excerpt from
You have been hired as a consultant for Pristine UrbanTech Zither, Inc. PUTZ manufacturers of fine zithers. An excerpt from the company's marketing report is as follows:
The zither industry will have a rapid expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell and units each year for the next four years respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium price of $ can be charged for each zither. Because zithers appear to be a fad, we feel at the end of the fouryear period, sales should be discontinued.
PUTZ believes that fixed costs for the project will be $ per year, and variable costs will be percent of sales. The equipment necessary for production will cost $ million and will be depreciated according to a threeyear MACRS schedule:
tableYear year MACRS
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