Rockstar Games is thinking about developing a new thrilling game, Excel at Excel! To date they have spent $45,000 on development 2 1 But the launch will require additional funding. A new server needs purchased for hosting and will cost $125,000. The server lasts ten 3 years and is depreciated to $5,000 on a straight line basis. A new software engineer will need to be hired to run continuing maintenance 4 and the game cannot run without this employee. The starting salary will be $85,000 and a raise of 3% per year is estimated. 5 6 A marketing associate currently on staff earns $35,000 per year. This associate will support the launch. If and when sales exceed 7 2100 units per year, the associate will be awarded a $3,000 bonus in each year those sales eclipse the target. Historically Rockstar has 8 seen returns of 13.35% on its game releases. 10 The entire purchase of the server will be made using a line of credit which requires a 4% simple interest rate. Additional advertising 11 expenditures will amount to 4% of revenues each year. 12 13 Additional taxes on profits from Excel at Excel! will be levied at 22.5%. If EBT is negative, no tax will be paid. 14 15 The sales estimates are as follows: Rockstar Games is thinking about developing a new thrilling game, Excel at Excel! To date they have spent $45,000 on development 2 1 But the launch will require additional funding. A new server needs purchased for hosting and will cost $125,000. The server lasts ten 3 years and is depreciated to $5,000 on a straight line basis. A new software engineer will need to be hired to run continuing maintenance 4 and the game cannot run without this employee. The starting salary will be $85,000 and a raise of 3% per year is estimated. 5 6 A marketing associate currently on staff earns $35,000 per year. This associate will support the launch. If and when sales exceed 7 2100 units per year, the associate will be awarded a $3,000 bonus in each year those sales eclipse the target. Historically Rockstar has 8 seen returns of 13.35% on its game releases. 10 The entire purchase of the server will be made using a line of credit which requires a 4% simple interest rate. Additional advertising 11 expenditures will amount to 4% of revenues each year. 12 13 Additional taxes on profits from Excel at Excel! will be levied at 22.5%. If EBT is negative, no tax will be paid. 14 15 The sales estimates are as follows