Cost associated with using the unused capacity for product

Assignment Help Financial Management

Reference no: EM131838652

You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product, “Battlin’ Bobby.” You had planned on using the unused capacity to start selling “BB” on the west coast in two years. You would eventually have had to purchase additional duplicating machines 10 years from today, but using the capacity for your new product will require moving this purchase up to 2 years from today. If the new machines will cost $102,000 and will be depreciated straight-line over a 5-year period to a zero salvage value, your marginal tax rate is 32 percent, and your cost of capital is 12 percent, what is the opportunity cost associated with using the unused capacity for the new product?

Reference no: EM131838652

Questions Cloud

What are three social science resources : What are three social science resources that can be used to investigate "the social factors that influence health"?

Unnecessary violence between police and community : The two groups I chose were police and community. The context of the conflict is to avoid unnecessary violence between police and community

What is an example of each selected research bias : How would you describe the two forms of bias you selected to a family member? What is an example of each selected research bias?

What strikes you about frequency distribution : what was the modal response and What strikes you about this frequency distribution - What does the graph suggest about the center and spread

Cost associated with using the unused capacity for product : what is the opportunity cost associated with using the unused capacity for the new product?

Who was liable for the missing personalty : Hallman spent the night at the New Colonial Hotel. On inquiry, he was told that the bellboy would take care of his car. The bellboy took the car to a nearby.

Conceptualism and operationalization : What do these terms mean and how do they apply in our studies of social psychology?

What is the annual depreciation tax shield : What is the annual depreciation expense associated with this equipment? What is the annual depreciation tax shield?

Paper comparing the dual roles of scientist : Paper comparing the dual roles of scientist and practitioner that I/O psychologists play. Include:

User Account

All Pages