You are an analyst for a sporting goods corporation that is considering a new project that will

Question:

You are an analyst for a sporting goods that is considering a new project that will take advantage of excess capacity in an existing plant. The plant has a capacity to produce 50,000 tennis racquets, but only 25,000 are being produced currently though sales of the rackets are increasing 10% a year. You want to use some of the remaining capacity to manufacture 20,000 squash rackets each year for the next 10 years (which will use up 40% of the total capacity), and this market is assumed to be stable (no growth). An average tennis racquet sells for $100 and costs $40 to make. The tax rate for the is 40%, and the is 10%. Is there an involved? If so, how much is it?
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