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Highly stumped on this homework problem, seeking help! Tom Gonzalez, founder of Safety-Plus, expects to spend the next one-half year developing and
Highly stumped on this homework problem, seeking help!
Tom Gonzalez, founder of Safety-Plus, expects to spend the next one-half year developing and testing prototypes for a safety light to be worn by runners. Tom anticipates paying monthly rent of $900 for space in a local warehouse where the safety light will be designed, developed, and tested. Utility expenses for power and heat are estimated at $250 per month. Tom plans to "draw down" a salary of $1,200 per month. Materials needed to build and test an initial prototype product are expected to cost $9,500. In addition, each redesign and new prototype will require an additional $4,500 investment (in other words, the first prototype will cost $9,500 and each additional prototype will cost $4,500). Tom anticipates that before the final safety light is ready for market at the end of six months, the initial plus two more prototypes will need to be built and tested. Costs associated with test marketing the safety light are estimated at $15,000.
