NUBD Co. is considering a new product that will sell for P100 and has a variable cost of P60. Expected volume is 20,000 units. New equipment costing P1,500,000 and having a five-year useful life and...


NUBD Co. is considering a new product that<br>will sell for P100 and has a variable cost of<br>P60. Expected volume is 20,000 units. New<br>equipment costing P1,500,000 and having a<br>five-year useful life and no salvage value is<br>needed, and will be depreciated using the<br>straight-line method. The machine has fixed<br>cash operating costs of P200,000 per year.<br>The firm is in the 40% tax bracket and has<br>cost of capital of 12%. Use 5 decimal places<br>for the PV factors. How many units per year<br>the firm must sell for the investment to earn<br>12% internal rate of return? *<br>

Extracted text: NUBD Co. is considering a new product that will sell for P100 and has a variable cost of P60. Expected volume is 20,000 units. New equipment costing P1,500,000 and having a five-year useful life and no salvage value is needed, and will be depreciated using the straight-line method. The machine has fixed cash operating costs of P200,000 per year. The firm is in the 40% tax bracket and has cost of capital of 12%. Use 5 decimal places for the PV factors. How many units per year the firm must sell for the investment to earn 12% internal rate of return? *

Jun 10, 2022
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