$($CHAPTER $7)$

Tree house clipartA company is considering the opportunity to invest into a new $8-$year project: manufacturing and selling remote$-$controlled tree houses. $$330,000$ would need to be spent upfront to cover the cost of buying the necessary production equipment, which will be depreciating at a constant rate each year over its $8-$year economic life. The equipment will be worthless when the project ends.

Additional information regarding the tree houses production:

$$2,600$ in per$-$tree$-$house costs, a$.$k$.$a$.$ variable cost of production

$$40,000$ in total $($i$.$e$.,$ not per tree house$)$ annual fixed production costs

Each sold tree house is estimated to bring the company $$3,500.$

The tax rate of $28\%$ applies to the company's taxable income each year. This project requires a $9\%$ annual rate of return.

Answer the following:

If the company manufactures and sells

$[$ Select $]$

tree houses each year, then it will break even in the "financial" sense. However, if the cost of buying the necessary production equipment turns out lower, the required annual break$-$even number of sold tree houses would need to be

$[$ Select $]$

$.$