Question
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
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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