Question
Your company is considering a slight design change to one of your products based on customer feedback. Your analysis indicates that after the redesign you
Your company is considering a slight design change to one of your products based on customer feedback. Your analysis indicates that after the redesign you will be able to sell more products with increased profits per year for 5 years. This redesign requires an immediate expense of $125,000 for some new tooling and other equipment modification. To pay for this expense, your company will withdraw money from an investment that pays 6.25% interest compounded annually. How much equal annual profits must be generated by this project to recover this initial expense in 5 years?
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