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On April 4th at 3:00 pm, 2019, Jason Smith, President of Clean Air Inc, called to order a meeting of the financial personnel. The purpose of the meeting was to make a capital budgeting decision with respect to the potential introduction and production of a new product, a liquid detergent called Blast. At this point, discussions opened up and came to a consensus that the opportunity costs of funds is 10%. Gasper then questioned the fact that no costs were included in the proposed cash budget for plant space which would be needed to produce the new product. Smith then replied that, at the present time, production of existing products would require 55% of total floor space and the additional full production of Blast would need another 10% of the total floor area. Would you suggest that Blast be charged for the use of the floor space it will use if area utilization is exactly as given in the project description? Would your opinion change given the assumption that needed production facilities for the existing products were at 55% of capacity and expected to grow at a rate of 20% and that the maximum production capacity is 100%. Once full capacity is reached, then Clean Air would have to invest $ 8MM for added floor capacity. If the required space for Blast remains at 10% throughout, how much would you charge to the Blast product in space requirement in PV terms

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