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Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are
Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $35,000. Annual operating costs will be directly proportional to the level of production at $7.5 per unit, and each unit of product can be sold at $50. If the MARR is 15% and the project has a life of 5 years, what is the minimum annual 15 production level for which this project is economically viable? [Hint: The minimum annual production level that makes the project economically viable is the break-even volume.)
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