Answer Happy

You plan to manufacture a Product X in Cote d'Ivoire (one of the poorest nations in the world): 8,000 units in 1st year, 15,000 units in 2nd year, and 20,000 in 3rd year. Fixed costs (e.g. rent, insurance, salaries...) are $10,000 in 1st year, $12,000 in 2nd year, and $18,000 in 3rd year. You plan to purchase equipment to manufacture Product Xs at $12,000 (at Year zero), with the life of the equipment of 3 years. Apply the straight-line depreciation method. Product X will be sold at $5 (no change in 3 years) each in over 12 African countries. Cost of Goods Sold (e.g. raw materials, packaging, direct labor) of each Product X is $3 (no change in 3 years). NGOs help you to distribute GPs to customers. The tax rate is 30%. The change in net working capital in the Year zero is -$10,000 and $10,000 in Year 3. Assume the expected rate of return is 5%. What is the Net Income in Year 2? O $9800 O $7804 O $6883 O $5202