PRINTER VERSION BACK NEXT Question 1 Cecil\'s Manufacturing is considering produ

Question

PRINTER VERSION BACK NEXT Question 1 Cecil's Manufacturing is considering producing a new product. The sales price would be $10.75 per unit. The cost of the equipment is $112,000. Operating and maintenance costs are expected to be $4,200 annually. Based on a 7-year planning horizon and a MARR of 12%, determine the number of units that must be sold annually to achieve breakeven. units Carry all interim calculations to 5 decimal places and then round your final answer up to the nearest unit. The tolerance is +5.

Explanation / Answer

Annual worth (AW) of costs ($) = 112,000 x A/P(12%, 7) + 4,200 = 112,000 x 0.2191** + 4,200 = 24,539.2 + 4,200

= 28,739.2

If annual output be Q, then for break-even,

AW of costs = Annual revenue

$28,739.2 = $10.75 x Q

Q = 2,673

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