The financial analyst for a manufacturer of tennis rackets

Reference no: EM131134349

You are the financial analyst for a manufacturer of tennis rackets that has identified a graphite-like material that it is considering using in its rackets. Given the following information about the results of launching a new racket, will you undertake the project? (Assumptions: Tax rate = 40%, Effective discount rate = 13%, Depreciation = $300,000 per year, and production will occur over the next five years only.)

	Pessimistic	Expected	Optimistic
Market size	110,000	120,000	130,000
Market share	22%	25%	27%
Price	$115	$120	$125
Variable costs	$72	$70	$68
Fixed costs	$850,000	$800,000	$750,000
Investment	$1,500,000	$1,500,000	$1,500,000

Reference no: EM131134349

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