A manufacturing company plans to renew production machinery to save on manufacturing costs. The unit selling price is 9 TL/ton, and the contribution margin is 3 TL/ton. The monthly total fixed cost, not including depreciation, is 6.000 TL.

The company expects to save on variable costs by renewing the machine. The cost of the new machine is 90.000 TL, and the economic life is five years. The expected unit variable cost is 5 TL/ton. The company computes the depreciation cost based on the Straight Line Method. The minimum expected return of the

investment is 2%.

1. Compute the monthly breakeven point for the new machine

b.The expected annual demand for production is 35.000 tons for the following five years. Should the company invest and why?