Demand for concave utility meters is expanding rapidly, but the industry is highly competitive. A utility meter plant costs $44 million to set up, and it has an annual capacity of 616,000 meters. The production cost is $11 per meter, and this cost is not expected to change. The machines have an indefinite physical life and the cost of capital is 14%. What is the competitive price of a utility meter? Competitive price is: Multiple Choice $11 $21 $16

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
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Demand for concave utility meters is expanding rapidly, but the industry is highly competitive. A utility meter plant costs $44 million to set up, and it has an annual capacity of 616,000 meters. The production cost is $11 per meter, and this cost is not expected to change. The machines have an indefinite
physical life and the cost of capital is 14%. What is the competitive price of a utility meter?
Competitive price is:
Multiple Choice
$11
$21
$16
Transcribed Image Text:Demand for concave utility meters is expanding rapidly, but the industry is highly competitive. A utility meter plant costs $44 million to set up, and it has an annual capacity of 616,000 meters. The production cost is $11 per meter, and this cost is not expected to change. The machines have an indefinite physical life and the cost of capital is 14%. What is the competitive price of a utility meter? Competitive price is: Multiple Choice $11 $21 $16
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