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Please Solve BY HAND not using Excel Question 2: Breakeven An automobile company is investigating the advisability of converting a plant that manufactures economy cars
Please Solve BY HAND not using Excel
Question 2: Breakeven An automobile company is investigating the advisability of converting a plant that manufactures economy cars into one that will make retro-sports cars. The initial cost for equipment conversion will be $250 million with a 20% salvage value anytime within a 5-year period. The cost of producing a car will be $25,000, but it is expected to have a selling price of $43,000 (to dealers). The production capacity for the first year will be 4000 units. At an interest rate of 12% per year, by what uniform amount "G" will production have to increase each year in order for the company to recover its investment in 3 years? Assume the production cost and selling price will remain constant for the 3-year periodStep by Step Solution
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