#6. (10pts) You forecasted the incremental earnings for a project. Now you considered the indirect effects of the projects that may affect the profits of other business activities of the same firm (Show your work)
Table before the project externalities
\(100,000\)
Sales
Year 1
Year 2
Year 3
Year 4
26,000
26,000
26,000
26,000
Cost of Goods (9,500)
(9,500)
(9,500)
(9,500)
Sold
Table after the project externalities: 15% of sales come from customers who would have purchased an old product if the new products were not available. (100,000 units = new product sales, $100 per unit = old product price per unit, and $60 per unit = old product unit cost)
\(100,000\)
Year 1
Sales (5pts)
Cost of Goods
Sold (5pts)
Year 2
Year 3
Year 4
4