Question
An automobile manufacturer is developing a new electric vehicle. The development cost is $100 million to be depreciated straight line over 5 years. The fixed
An automobile manufacturer is developing a new electric vehicle. The development cost is $100 million to be depreciated straight line over 5 years. The fixed costs will be $25 million annually. The variable costs will be $20 thousand per vehicle. The opportunity cost of capital is 10%, and the tax rate is 20%. The Marketing Department has proposed a retail list price of $60 thousand per car. How many vehicles must the company sell annually to breakeven from a cash flow (NPV) perspective? Show all work for full credit. You can upload a picture of your work if easier.
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