The minimum annual production rate to make this investment justifiable is:

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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3 (please circle the final answer )
A manufacturing company is considering a
capacity expansion investment at the cost of
$255,695 with no salvage value. The
expansion would enable the company to
produce up to 33,899 parts per year and the
useful life of the additional capacity is seven
years. Each part would generate $1.76 net
profit and annual operating and maintenance
costs are estimated at $28,322 per year. The
market demand for the parts is unlimited, all
parts produced will be sold. The MARR of the
firm is 10%.
The minimum annual production rate to make
this investment justifiable is:
Enter your answer in this form: 12345.67
Transcribed Image Text:A manufacturing company is considering a capacity expansion investment at the cost of $255,695 with no salvage value. The expansion would enable the company to produce up to 33,899 parts per year and the useful life of the additional capacity is seven years. Each part would generate $1.76 net profit and annual operating and maintenance costs are estimated at $28,322 per year. The market demand for the parts is unlimited, all parts produced will be sold. The MARR of the firm is 10%. The minimum annual production rate to make this investment justifiable is: Enter your answer in this form: 12345.67
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