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( CHAPTER 7 ) Tree house clipartA company is considering the opportunity to invest into a new 8 - year project: manufacturing and selling remote
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Tree house clipartA company is considering the opportunity to invest into a new year project: manufacturing and selling remotecontrolled tree houses. $ 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 year economic life. The equipment will be worthless when the project ends.
Additional information regarding the tree houses production:
$ in pertreehouse costs, aka variable cost of production
$ in total ie not per tree house annual fixed production costs
Each sold tree house is estimated to bring the company $
The tax rate of applies to the company's taxable income each year. This project requires a annual rate of return.
Answer the following:
If the company manufactures and sells
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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 breakeven number of sold tree houses would need to be
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