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the chief engineer for Portland Purifiers, a maker of industrialwater filters with major (and patentable) improvement over currentmarket offerings. she estimates that the development of the productlaunch cost half a million dollars, including tooling themanufacturing line. the last product launch cost about $200,000 inmarketing and promotion costs. she thinks the product would sellfor about $50,000 and should sell 75 units in year 1, 140 in year2, and then level out at 200 per year. contribution margins is 40percent. should the company continue with this project? what do youneed to know about the company in order to understand its decisionto go or not go ahead? what is the payback period?
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