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The manufacture of disposable gloves is a competitive industry with no competitive advantage. The manufacturing facilities have an annual output of 50 billion pieces of
The manufacture of disposable gloves is a competitive industry with no competitive advantage. The manufacturing facilities have an annual output of 50 billion pieces of gloves. Operating costs are $0.10 per piece. A 50 billion-piece capacity plant costs $15 billion to build and have an indefinite (perpetual) life, with no salvage value. The cost of capital is 10% (assume no taxes). What should be the selling price per piece of the glove?
a.
$0.10/piece
b.
$0.12/piece
c.
$0.13/piece
d.
$0.15/piece
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