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Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years.
Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line and there is no anticipated salvage value. The machine costs $575,000. The sales price per pair of shoes is $60, while the variable cost is $14. The $165,000 of fixed costs per year are attributed to the machine. Assume the same number of unit sales in each year of the project. Assume that the corporate tax rate is 34% and the appropriate discount rate is 8%. Given this information, what is the economic break-even point of sale
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