Using the unused capacity for new product

Assignment Help Financial Management

Reference no: EM131581157

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 $115,000 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 16 percent, what is the opportunity cost associated with using the unused capacity for the new product?

Reference no: EM131581157

Questions Cloud

Determine and describe at least three opportunities : Determine and describe at least three opportunities that an organization may present to encourage employee career development and performance.

Iso network management model : The objective of security management is to manage access to network assets as indicated by local rules with the goal that the system

Possible ways that an infant may respond to a family death : Developmental information about what an infant may feel or understand about a family death

Memory management performed by windows : Explain 4 functions in file processand memory management performed by windows 7 operating system

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

Examine the reliability and validity of these statistics : Examine the reliability and validity of these statistics. Are they accurate? Why or why not?

Absolute advantage in production of both the given services : Suppose that in a one-hour period, you can buy six bags of groceries or clean three rooms. Your housemate, however, is slower moving and can buy only three bag.

Prepare the forms and schedules : For the current year, Joan's W-2 from the city fire department is located. The following forms and schedules are required: Form 1040 and Schedule E

Optimal performance of the database : Defining relationships within a database can improve search capabilities and optimal performance of the database in the long run.

User Account

All Pages