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A start-up company buys ball bearings, paints them black and then sells them. The capital required for the start-up is $2,000 (which can be depreciated
A start-up company buys ball bearings, paints them black and then sells them. The capital required for the start-up is $2,000 (which can be depreciated by straight line over 10 years). Its fixed and variable costs total $250 per year. It plans to buy and produce 100 ball bearings per year. It buys the ball bearings (which it then paints) for $10/bearing. It expects to have a 10 year life. The marginal tax rate is 40%. What price per ball bearing to get a 10% return?
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