Question: You work for a camera company and are tasked with creating a breakeven analysis for a new piece of equipment. You are provided with the
You work for a camera company and are tasked with creating a breakeven analysis for a new piece of equipment. You are provided with the following information: Units sales: 200,000 year 1; 250,000 year 2; 300,000 year 3. Unit cost: $60 year 1; 55 year 2; 50 year 3. Advertising year 1 $1,500,000. The company wants to increase advertising by 25% each year to ensure they drive enough demand to justify the new piece of equipment. (hint, multiply by 1.25) Consumer Promotion costs: 1,800,000 for all three years Personal Selling costs: $400,000 year 1; $480,000 year 2; $560,000 year 3. Dealer promotion costs: $1,200,000 for all years. The production system upgrade will cost $1.7 million dollars. The targeted return on sales is 10% The current sale price is $89.00 Will the investment breakeven in three years or less; if so what year? Will the investment cover the desired profit: if so what year? Will the investment cover the investment cost: if so what year
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