Your company is considering the introduction of a new product line. The initial investment required for this project is
Posted: Fri Jul 01, 2022 7:36 am
Your company is considering the introduction of a new productline. The initial investment required for this project isRM2,000,000, and annual maintenance costs are anticipated to beRM140,000. Annual operating cost will be directly in proportion tothe level of production at RM30 per unit, and each unit of productcan be sold for RM200. If the project has a life of five years,what is the minimum annual production level for which this projectis economically viable? Assume five-year straight line depreciationwith no salvage value, an effective tax rate of 40%, and anafter-tax MARR of 10% per year.