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Asset acquisition is $1,400,000 with a four-year life (straight-line depreciation) and no salvage value. You estimate sales at 180 units/year with a $16,000/unit selling price.
Asset acquisition is $1,400,000 with a four-year life (straight-line depreciation) and no salvage value. You estimate sales at 180 units/year with a $16,000/unit selling price. Variable costs are expected to be $9,800/unit, and fixed costs will be $430,000 annually. Your project requires a 12% rate of return, and the companys tax rate is 35%. Based on prior experience, you believe unit sales, variable costs, and fixed cost projections to be accurate to within +/- 10%. a.
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