Question
Demerara Icehouse Inc. is considering a new investment in ice-making. The new equipment costs $6 million, fixed annual costs are $0.5 million, variable costs $1
Demerara Icehouse Inc. is considering a new investment in ice-making. The new equipment costs $6 million, fixed annual costs are $0.5 million, variable costs $1 per ice block and it sells for $6. The company uses a hurdle rate of 20%. The equipment will last of 5 years. Calculate the break-even (i.e., NPV = 0) sales volume per year. (Ignore taxes. Round to the nearest 1,000.)
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Peggy L. Hedges, Philip Chang, Keith C. Brown, Hedges Reilly Brown
1st Canadian Edition
0176500693, 978-0176500696
