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Your company is considering the introduction of a new product line. The initial investment required for this project is RM 500,000, and annual maintenance costs
- Your company is considering the introduction of a new product line. The initial investment required for this project is RM 500,000, and annual maintenance costs are anticipated to be RM 35,000. Annual operating cost will be directly in proportion to the level of production at RM 7.50 per unit, an each unit of product can be sold for RM 50.00 per unit. If the project has a life-span of five years, determine the minimum annual production level for which this project is economically viable? Use a straight-line depreciation with zero salvage value, and an effective income-tax rate of 40%. After-tax minimum attractive rate of return (MARR) for this project is 10% per year.
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