(Abandonment Option) Hit or Miss Sports Is Introducing a New

question 40

Essay

(Abandonment Option) Hit or Miss Sports is introducing a new product this year.If its "see-at-night" soccer balls are a hit, the firm expects to be able to sell 50,000 units a year at a price of $60 each.If the new product is a bust, only 30,000 units can be sold at a price of $55.The variable cost of each ball is $30, and fixed costs are zero.The cost of the manufacturing equipment is $6 million, and the project life is estimated at 10 years.The firm will use straight-line depreciation over the 10-year life of the project.The firm's tax rate is 35 percent and the discount rate is 12 percent.

Grasp the economic issues of supply and demand, including understanding limited resources.

Comprehend the concept of profit as the primary goal of business and its societal implications.

Identify the role and importance of stakeholders in an organization’s success.

Understand the aspects and functions of management within a business context.