Send it into Orbit Golf Inventions is considering introducing a new

high velocity long distance golf ball. The company believes that if

the golf balls can be priced competitively at $$72$ per box of $12,$

approximately $24,000$ boxes can be sold.

The CEO $($Chief Executive Officer$)$ feels an investment in new

manufacturing equipment will be necessary. The cost of the new

equipment to manufacture the balls will be $$1,450,000.$

Send it into Orbit requires a minimum rate of return of $20\%$ on all

investments, therefore, if the company was to pursue this new golf

ball market, their minimum return of $20\%$ on all investments would

mean that their profit necessary from investing in the new

equipment would be $$1,450,000$ x $20\%=$ $$290,000.$

Instructions

$1.$ Base on the company$$s minimum rate of return of $20\%,$ compute

the target cost per box of balls.

$2.$ What would the target cost per box be if the company were

willing to accept a return of $18\%$ instead of $20\%?$

$3.$ What $$qualitative$$ factors should the company consider in

evaluating the above opportunity?