00,000, the building costs $600,000, the uipment costs $250,000, and $100,000 additiona rking capital is required. It is expected that the duct will result in sales of $750,000 per year for 1 ars, at which time the land can be sold for 00,000, the building for $350,000, the equipmen $50,000, and the working capital of $100,000 w recovered. The company is expecting to sell 000 units of the product every year. The annual benses for labor, materials, and all other items are imated to total $475,000. If the company requires MARR of 8% per year, determine the profit/unit of - new product.
00,000, the building costs $600,000, the uipment costs $250,000, and $100,000 additiona rking capital is required. It is expected that the duct will result in sales of $750,000 per year for 1 ars, at which time the land can be sold for 00,000, the building for $350,000, the equipmen $50,000, and the working capital of $100,000 w recovered. The company is expecting to sell 000 units of the product every year. The annual benses for labor, materials, and all other items are imated to total $475,000. If the company requires MARR of 8% per year, determine the profit/unit of - new product.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A company is considering constructing a plant to
manufacture a proposed new product. The land costs
$300,000, the building costs $600,000, the
equipment costs $250,000, and $100,000 additional
working capital is required. It is expected that the
product will result in sales of $750,000 per year for 10
years, at which time the land can be sold for
$400,000, the building for $350,000, the equipment
for $50,000, and the working capital of $100,000 will
be recovered. The company is expecting to sell
10,000 units of the product every year. The annual
expenses for labor, materials, and all other items are
estimated to total $475,000. If the company requires
a MARR of 8% per year, determine the profit/unit of
the new product.
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