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Majestic is considering a project that will cost $ 1,550,000 has a life of five years and has a salvage value of $ 100,000. The
Majestic is considering a project that will cost $ 1,550,000 has a life of five years and has a salvage value of $ 100,000. The unit price will be $ 1,300, the unit variable cost will be $ 600 and the fixed costs will be $ 205,000 per year. The project requires an initial working capital of $ 25,000 and an additional working capital of 5% of sales annually. The required return on the project is 12% and the tax rate is 30%. How many units would you have to sell to achieve a 20% return on the project?
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