Problem $3-10$

The Tuff Wheels was getting ready to start its development project for a new product to

be added to their small motorized vehicle line for children. The new product is called the

Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a

blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the

new Kiddy Dozer. The table below contains the relevant information for this project.

Tuff Wheels also has provided the project plan shown below. As can be seen in the

project plan, the company thinks that the product life will be three years until a new

product must be created.

a$.$ What is the net present value $($discounted at $8\%)$ of this project? Consider all costs and

expected revenues. $($Enter your answer in thousands of dollars. Round your answer

to the nearest thousand.$)$

Net present

value

b$.$ What is the impact on NPV for the Kiddy Dozer if the actual sales are $50,000$ per

year? $$70,000$ per year? $($Enter your answer in thousands of dollars. Round your

answer to the nearest thousand.$)$