Question
Celine discovered a new machine that will solve the energy problem. The machine can be purchased and used to supply all energy need of a
Celine discovered a new machine that will solve the energy problem. The machine can be purchased and used to supply all energy need of a house. The machine utilizes a new and very safe nuclear technology in a device of the size of an average refrigerator. The price of this device is $45,000. The variable cost of the device is $30,000. The annual fixed cost (not including the depreciation) is 30 billion dollars. Production of this device require a 480 billion dollars of investment in very sophisticated plant that will be built just outside of Slippery Rock. The economic life of the project is 12 years. The plant will be depreciated using a straight line depreciation method to a salvage value of zero. The actual salvage value of the plant is also expected to be zero. If the appropriate discount rate for the project is 15 percent, what is the minimum number of units need to be sold for an NPV break-even, that is to have zero NPV? Assume that the marginal tax rate is 21 percent.
Question 5 options:
| 8,835,432 units |
| 8,356,824 units |
| 8,742,344 units |
| 8,763,779 units |
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