## [solution]: 20.1 If the switch is made, an extra 100 units per period will be sold at a gross profit of \$175...

More Details:

20.1    If the switch is made, an extra 100 units per period will be sold at a gross profit of \$175 2 130 5 \$45 each. The total benefit is thus \$45 3 100 5 \$4,500 per period. At 2.0 percent per period forever, the PV is \$4,500y.02 5 \$225,000. The cost of the switch is equal to this period’s revenue of \$175 3 1,000 units 5 \$175,000 plus the cost of producing the extra 100 units: 100 3 \$130 5 \$13,000. The total cost is thus \$188,000, and the NPV is \$225,000 2 188,000 5 \$37,000. The switch should be made.

Solution details:
STATUS
QUALITY
Approved

This question was answered on: Dec 18, 2020

Solution~00031147983803.zip (25.37 KB)

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)

STATUS

QUALITY

Approved

Dec 18, 2020

EXPERT

Tutor