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In: Accounting

A company plans to invest for a production plant. Annual production plan is 50 million units....

A company plans to invest for a production plant. Annual production plan is 50 million units. The investment at time 0 that is required for building the manufacturing plant is estimated as $600 million, and the economic life of the project is assumed to be 11 years. The annual total operating expenses, including manufacturing costs and overheads, are estimated as $125 million. The salvage value that can be realized from the project is estimated as $90 million. If the company’s interest is 17%, determine the minimum price that the company should have for the product so that the total costs are covered.

Select one:

a. 3.44

b. 2.33

c. 4.91

d. 7.51

e. 6.45

f. 5.91

A company plans to invest for a production plant. Annual production plan is 50 million units. The investment at time 0 that is required for building the manufacturing plant is estimated as $600 million, and the economic life of the project is assumed to be 11 years. The annual total operating expenses, including manufacturing costs and overheads, are estimated as $125 million. The salvage value that can be realized from the project is estimated as $90 million. If the company’s interest is 17%, determine the minimum price that the company should have for the product so that the total costs are covered.

Select one:

a. 3.44

b. 2.33

c. 4.91

d. 7.51

e. 6.45

f. 5.91

Expert Solution

ekkarill92 answered 1 year ago

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