famous for its barbeque grills. Asados considers developing a new
grill named Fuego, which is better suited to the barbequing style
of British customers. The company commissioned a feasibility study
from a consulting firm at a cost of £80,000. The projected revenues
and costs associated with launching the new grill Fuego are as
follows: 1. Asados will be selling 55,000 grills per year at a
price of £215 per grill during four years. Asados’s will be
discontinuing Fuego at the end of the 4th year. The cost is £80 per
grill. The new grill is aimed at a different market niche than the
products the company currently offers, such that no cannibalisation
is expected to occur. 2. They estimate an annual Selling and
Marketing overhead cost of £3,300,000 to market the product in the
British market. 3. Asados needs to make an initial investment of
£6,000,000 in a new machine in year 0. The new machine has no
recovery (salvage) value and fully depreciates by 25% per year for
4 years (hint: the problem starts in year 0 with the investment in
the machine, sales start in year 1 and end in year 4). 4. The
machine will be installed in an existing industrial estate owned by
the firm, that could be otherwise rented out by £500,000 per year
in case the company chooses not to undertake Fuego project. 5.
Working capital requirements: Asados estimates that customers pay
on average within 55 days, whereas Asados can pay back their
suppliers within 55 days too. They do not anticipate any cash nor
inventory requirements. (Hint: Working capital will be required in
year 1 and will be recovered later in year 4).
- Asados Is An Argentinian Manufacturer With Operations In The Uk Famous For Its Barbeque Grills Asados Considers Develo 1 (41 KiB) Viewed 48 times