The Colby Brothers Have Been Busy Analyzing a New Product

question 24

Multiple Choice

The Colby Brothers have been busy analyzing a new product. They have determined that an operating cash flow of $18,200 will result in a zero net present value, which is a company
Requirement for project acceptance. The fixed costs are $11,650 and the contribution margin is
$7) 40. The company feels that they can realistically capture five percent of the 75,000 unit market
For this product. Should the company develop the new product? Why or why not?

• A) Yes; The project has an expected internal rate of return of 100 percent.
• B) Yes; The expected level of sales exceeds the required number of units.
• C) Yes; The project is expected to sell 324 units more than the required number of units.
• D) No; The expected level of sales is less than the required level of 4,034 units.
• E) No; The annual sales would need to exceed 4,521 units to be acceptable.

---

Definitions:

Wireless Connectivity

A type of network connection that doesn't require cables and allows devices to communicate through radio waves or infrared signals.

Network Adapter

A hardware or software component that connects a computer or other device to a network, enabling it to communicate with other devices or the internet.

Computing Devices

Electronic tools that process, store, and communicate information, ranging from personal computers to smartphones.

Application Server

An Application Server is a computing platform that provides an environment for the running of applications, distributing workloads among multiple computing resources.