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KT Televisions, a US firm, has a Chinese subsidiary that manufactures and sells TVs in China. The main input is priced in USD (USD100/unit) All

KT Televisions, a US firm, has a Chinese subsidiary that manufactures and sells TVs in China.

  1. The main input is priced in USD (USD100/unit)
  2. All other costs are in CNY (Fixed cost=CNY4M, Variable cost= CNY400/unit).
  3. Depreciation = CNY1M
  4. S0 = CNY6/USD
  5. Expects to sell 6,000 TVs this year at CNY2,000 each.
  6. Tax rate=30%; assuming tax credits are available for immediate use if losses occur.

How many unit KT Televisions needs to sell to break-even in operating cash flows in dollars?

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