Business, 10.03.2020 07:04 hrijaymadathil

Calvin Excellenza is a new manufacturing start-up at a university city. The firm is introducing an innovative scooter based on the market survey among college students. The company plans to obtained a loan of $350000 from a bank at an interest rate of 8% to procure and install the equipment needed to start the production. Calvin assumes that the scooter will sell for the next seven years before a new design is introduced. It was estimated that 800 units will be sold in the first year. Furthermore, the volume of sales is expected to increase by 8% for the next 3 years at which time the sales will reach its peak. Afterward, it is expected that the sales will decline at a rate of 10% for the next 3 years. A unit of the product will be sold for $130 in the first year and the he price will then increase by 4% annually for the next three years. During the period of the expected declining sales (the remaining three years), the price will be reduced by 5% annually. Determine the present worth of this investment and decide if this investment is worthwhile.

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Calvin Excellenza is a new manufacturing start-up at a university city. The firm is introducing an i...

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