Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3
(please circle the final answer )

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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