Question
The new Designer Jeans was expected to sell for $ 83 per unit and had projected sales of 4100 units in the first year, with
The new Designer Jeans was expected to sell for $ 83 per unit and had projected sales of 4100 units in the first year, with a projected (Most-Likely scenario) 21.0 % growth rate per year for subsequent years. A total investment of $ 1,057,000 for new equipment was required. The equipment had fixed maintenance contracts of $ 281,508 per year with a salvage value of $ 148,073 and variable costs were 5 % of revenues. Shantel also needed to consider both the Best-Case and Worst-Case scenarios in the analysis with growth rates of 31.00 % and 2.10 % respectively. The company also has 99000 bonds outstanding, with a current price of $ 999.00. The bonds pay interest semi-annually at a coupon rate of 6.20 %. The bonds have a par value of $1,000 and will mature in 6 years. The average corporate tax rate was 32 %.
What is the fixed cost?
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