Question
A company plans to invest for a production plant. Annual production plan is 30 million units. The investment at time 0 that is required for
A company plans to invest for a production plant. Annual production plan is 30 million units. The investment at time 0 that is required for building the manufacturing plant is estimated as $400 million, and the economic life of the project is assumed to be 12 years. The annual total operating expenses, including manufacturing costs and overheads, are estimated as $155 million. The salvage value that can be realized from the project is estimated as $100 million. If the companys interest is 15%, determine the minimum price that the company should have for the product so that the total costs are covered.
Select one: a. 3.44 b. 7.51 c. 6.45 d. 4.91 e. 5.91 f. 2.33
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