Question
A company sells Gizmos to consumers at a price of $95 per unit. The costs to produce Gizmos is $29 per unit. The company will
A company sells Gizmos to consumers at a price of $95 per unit. The costs to produce Gizmos is $29 per unit. The company will sell 19,000 Gizmos to consumers each year. The fixed costs incurred each year will be $220,000. There is an initial investment to produce the goods of $3,700,000 which will be depreciated straight line over 5 year life of the investment to a salvage value of $0. The opportunity cost of capital is 7% and the tax rate is 29%
Operating Cash flow = 948740
NPV = 190021.32
Find the net present value break-even level of units sold
(correct answer should be 18,011 but how do you find this?)
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