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The market for blue widgets is going nuts. However the industry is highly competitive. A plant to build the BWs is $50M and it can
The market for blue widgets is going nuts. However the industry is highly competitive. A plant to build the BWs is $50M and it can produce 500,000 BWs a year. It costs $5 per BW and it is not expected to change. The machines have an indefinite life and the cost of capital is 10%. What is the competitive price of a BW? a) $5 b) $10 c) $15
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