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Sunland Christmas Trees Inc. management is considering introducing a new line of inexpensive Christmas trees. The initial outlay for the project is $196,000, and
Sunland Christmas Trees Inc. management is considering introducing a new line of inexpensive Christmas trees. The initial outlay for the project is $196,000, and the company will have to invest $6,000 in working capital and $11,000 in fixed assets each year during the six-year life of the project. Annual depreciation and amortization charges for the project will be $17,000, and cash-related fixed costs will be $7,000 per year. The firm will sell each tree for $84, and the variable cost to produce each tree will be $45. Calculate the number of trees that the firm must produce and sell in order to break even economically. Assume that the appropriate cost of capital for the project is 10 percent and that the marginal tax rate for the firm is 35 percent. (Round final answer to O decimal places, eg. 5,275.) Number of trees to be produced
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