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A tree house manufacturing company would like to try using a cutting-edge 3D printing technology to print tree houses. It is considering testing this technology
A tree house manufacturing company would like to try using a cutting-edge 3D printing technology to "print" tree houses. It is considering testing this technology as its new 15-year project. It will be necessary to immediately invest $850,000 to buy all the required 3D printer technology, which will have a 15-year economic life and depreciate at the same rate each year. These 3D printers will be worthless at the end of this project.
The company also estimates the following:
- Annual fixed production costs will equal $63,000,
- An additional cost, a.k.a. variable cost, per each manufactured tree house will equal $5,300,
- Each manufactured tree house can be sold for $5,900.
The company falls into a 30% tax bracket. The required annual rate of return for this project is 9%.
Calculate the following. Increase the decimal places for any intermediate calculations in order to avoid rounding errors! Round your answer to whole number
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