a. multiple choice (232 -178 - 140 -119 - 88 - 68)

b. higher OR lower

A company is considering the opportunity to invest into a new 12- year project: manufacturing and selling remote-controlled tree houses. $600,000 would need to be spent upfront to cover the cost of buying the necessary production equipment, which will be depreciating at a constant rate each year over its 12-year economic life. The equipment will be worthless when the project ends. Additional information regarding the tree houses production: $3,500 in per-tree-house costs, a.k.a. variable cost of production $42,000 in total (i.e., not per tree house) annual fixed production costs Each sold tree house is estimated to bring the company $4,200. The tax rate of 34% applies to the company's taxable income each year. This project requires a 6% annual rate of return. Answer the following: If the company manufactures and sells (Select] tree houses each year, then it will break even in the "financial" sense. However, if the cost of buying the necessary production equipment turns out [ Select) . the required annual break-even number of sold tree houses would need to be higher