Process A has a fixed cost of $16,000 per year and a variable cost of $40 per

Question:

Process A has a fixed cost of $16,000 per year and a variable cost of $40 per unit. For process B, 5 units can be produced in 1 day at a cost of $125. If the company’s MARR is 10% per year, the fixed cost of process B that will make the two alternatives have the same annual cost at a production rate of 1000 units per year is closest to:

(a) Less than $10,000

(b) $18,000

(d) Over $30,000

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...