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AquaPower Inc. produces hydro energy conversion systems which sell for $800 each. The firm's fixed costs, F, are $15,000; 100 units are produced and sold
AquaPower Inc. produces hydro energy conversion systems which sell for $800 each. The firm's fixed costs, F, are $15,000; 100 units are produced and sold each year; operating profit is $15,000; and the firm's assets (20% debt financed) are $240,000. The firm is considering increasing the size of its operation, adding $50,000 to total investment and $800 to fixed operating costs per year. The change will reduce the variable costs per unit by $80, and increase its output from 100
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