Decide uniform amount the capacity must increase each year

Reference no: EM13684297

Cougar Telemarketing is considering establishing a call center. The initial cost will be $2,750,000 with a $27,500 market value any time within a 13-year period. The fixed cost of the center will be $833,400 per year with an average variable cost of $3.00 per call. Cougar expects to generate revenue of $5.25 per call with a capacity of 110,000 calls for the first year. The company also expects to increase the capacity uniformly each year. At an interest rate of 2 percent per year, decide the uniform amount the capacity must increase each year so that the company can recover its investment in three years.

Reference no: EM13684297

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