Project cash flows, Project Cash Flows: Your highly

Project cash flows

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Reference no: EM13923723

Project Cash Flows: Your highly successful software company is considering adding a new software title to your list. If you add the new product, it will use the full capacity of your disk duplicating machines that you planned on using for your flagship product "Battling Bobby" You had previously planned on using the capacity to start selling BB on west coast in two years. Eventually You planned to buy additional machines in 10 years from today, but since your new product will use up the extra capacity now it will be required to purchase in 2 years from today. The new machines will cost $100,000 and will be depricated straight line over a 5 year period to zero salvage value, your marginal tax rate is 32 percent and cost of capital is 12 percent, what is opportunity cost associated with using the unused capacity for your new product?

Reference no: EM13923723

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