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1. Dave & Co. is considering investing $1,000,000 to launch a new product. This new project is expected to incur annual fixed costs of $60,000.
1. Dave & Co. is considering investing $1,000,000 to launch a new product. This new project is expected to incur annual fixed costs of $60,000. At the end of seven years (which is also the expected useful life of the project), remaining assets from the project is anticipated to be sold for $50,000. The unit contribution margin of this new product is estimated to be $12.50. The company has a cost of capital of 8%.
Identify the break-even number of units for this new product.
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