The pre-packaged meals food production facility at Wodonga, Dolmio Pasta, will require a new steam oven...

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The pre-packaged meals food production facility at Wodonga, Dolmio Pasta, will require a new steam oven costing $500,000 with an additional $50,000 needed in freight and insurance for the machine and $30,000 for the actual installation and training required to operate the oven. The additional revenue created by the new line of pre-cooked pasta meals is expected to be $200,000 each year, however, annual labour costs will be increased by $40,000 and overhead expenses will increase by $20,000 for each of the ten years of the project. At the end of the ten years, the machine is expected to be sold for $40,000 and it is expected it will have a written down value (WDV) of $0 at that time (straight-line depreciation). Dolmio Pasta has employed a marketing consultant for $10,000 to report on the viability of the new product. The company has a required rate of return on new projects of 20 percent and Dolmio Pasta do not consider tax when making capital budgeting decisions. The pre-packaged meals food production facility at Wodonga, Dolmio Pasta, will require a new steam oven costing $500,000 with an additional $50,000 needed in freight and insurance for the machine and $30,000 for the actual installation and training required to operate the oven. The additional revenue created by the new line of pre-cooked pasta meals is expected to be $200,000 each year, however, annual labour costs will be increased by $40,000 and overhead expenses will increase by $20,000 for each of the ten years of the project. At the end of the ten years, the machine is expected to be sold for $40,000 and it is expected it will have a written down value (WDV) of $0 at that time (straight-line depreciation). Dolmio Pasta has employed a marketing consultant for $10,000 to report on the viability of the new product. The company has a required rate of return on new projects of 20 percent and Dolmio Pasta do not consider tax when making capital budgeting decisions.