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A company sells Gizmos to consumers at a price of $119 per unit. The costs to produce Gizmos is $30 per unit. The company
A company sells Gizmos to consumers at a price of $119 per unit. The costs to produce Gizmos is $30 per unit. The company will sell 18,000 Gizmos to consumers each year. The fixed costs incurred each year will be $190,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 11 year life of the investment to a salvage value of $0. The opportunity cost of capital is 6% and the tax rate is 25%.
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