Otobai Company in Osaka, Japan is considering the introduction of an electrically powered motor scooter for city use. The scooter project requires an initial investment of ¥16.8 billion. The cost of capital was assumed to be 9%. The initial investment can be depreciated on a straight-line basis over the 10-year period, and profits are taxed at a rate of 50%.
Consider the following estimates for the scooter project.
Market size 1.28 million Market share 0.1 Unit price ¥580,000 Unit variable cost ¥ 540,000 Fixed cost ¥ 2.18 billion