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Development of a new product

Your company is considering the development of a new product, delivered as software as a service (SaaS) which tracks employee’s time working. The engineering team estimates that it will cost $1 million to develop. The marketing team plans to charge $3 per month for each subscriber to the service and expect that server costs will run about $0.5 per month for each subscriber, which is the primary running cost. Additionally, the number of subscribers to the service is predicted as: 2000 in the first month, growing by 1000 per month for the first three years.

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