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To manufacture an initial run of a machine the firm will invest $ 7 5 0 , 0 0 0 for manufacturing equipment, which should

To manufacture an initial run of a machine the firm will invest $750,000 for manufacturing equipment, which should last six years, with straight line depreciation and no salvage value. The tax rate would be 30%. The initial selling price for a unit is $7,000. Fixed costs, excluding tax-deductible depreciation expense, would be $250,000 per year. a) If you sell 60 units per year, what it the payback period fo rthe initial investment? b) What is the IRR c) What would the selling price have to be to generate a NPV of $150,000 at a 15% discount rate

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