Conch Republic Electronics

Conch Republic Electronics

Spent $750,000 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 $97.00 each.

Fixed Costs for the operation are estimated at $3.4 million per year.

Unit Price $275.00 each

Necessary equipment to produce the PDA will cost $20.5 million, with depreciation for 7 years MACRS schedule.

It is believed that this equipment after 5 years will be worth $3.5 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:

NWC 20%

Estimated sales volume per year is

1. 68,000

2. 79,000

3. 105,000

4. 83,000

5. 64,000

2.