Company A has an idea for a new product, product X. However, they need at least a 25% ROI to give the project a green light. They have compiled all the necessary data and have assigned you the task of determining if the project is a go or not. Based on the following data, judge whether product X should be launched by finding the first year ROI.

• Product X will be the first of its kind on the market.

• It will sell for $30 per unit.

• It costs $18 per unit to manufacture product X (this includes all materials and manufacturing cost).

• The sales cost for product X will be $3 per unit.

• The market survey showed that there is a market for three million units of product X per year. They plan to be first-to-market (1 year after the start of development) and expect that product X can be viable for a period of at least 15 years.

• It will cost $3.5 million to develop product X.

• Company A plans on having a 33% market share (990,000 customers) for the first year.

Answer rating: 100% (QA)

Sales Price 30 Less Cost to manufacture 18 Less Selling Overhead ... View the full answer