What is the minimum annual production level for project

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Reference no: EM131506365

Question: Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $35,000. Annual operating cost will be in direct proportion to the level of production at $8.50 per unit, and each unit of product can be sold for $50.00. If the project has a life of 7 years, what is the minimum annual production level for which this project is economically viable? Work this problem on an aftertax basis. Assume 5-year SL depreciation (SV5 = 0), MV7 = 0, an effective income tax rate of 40%, and an after-tax MARR of 10% per year.

Reference no: EM131506365

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