Problem 2:
Given Data:
Alpha Homes
Probable costs and market potential:
New equipment cost			$ 310,000
Usable life in years			12
Salvage value as % of cost			10%
Working capital investment			$ 130,000
Year when working capital would be released			12
Projected sales:
Year	Units
1	5,000
2	8,000
3	11,000
4-12	12,000
Unit selling price	$ 135
Variable costs per unit	$ 77
Advertising costs:
Year	Amount
1-2	$ 210,000
3	$ 150,000
4-12	$ 120,000
Fixed costs per year for
Salaries, insurance, maintenance, depreciation			$ 382,500
Minimum rate of return			15%