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Your company has been approached to bid on a contract to sell 5,300 voice recognition (VR) computer keyboards a year for four years. Due to
Your company has been approached to bid on a contract to sell 5,300 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. The equipment necessary for the production will cost $4.1 million and will be depreciated on a straight-line basis to a zero salvage value. Production will require an investment in net working capital of $445,000 which will be returned at the end of the project, and the equipment can be sold for $405,000 at the end of production. Fixed costs are $620,000 per year, and variable costs are $85 per unit. In addition to the contract, you feel your company can
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