Conch Republic Electronics
Spent $750.00 to develop a prototype (or Model) for a new PDA
Spent an additional $200,000 for marketing study to determine the expected sales.
Can manufacture the new PDA with variable cost for $86.00 each.
Fixed Costs for the operation are estimated at $3 million per year.
Unit Price $250.00 each
Necessary equipment to produce the PDA will cost $15 million, with depreciation for 7 years MACRS schedule.
It is believed that this equipment after 5 years will be worth $3 million.
NWC will be 20% of Sales
Changes in NWC will occur in Year 1, with the first year sales.
There is no initial outlay for NWC.
Conch Republic Corporate Tax Rate is 35% and has a 12% required return.
Estimated Sales Volumes:
Year Est.Sales of Sales
1 70,000 14,000
2 80,000 16,000
3 100,000 20,000
4 85,000 17,000
5 75,000 15,000
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