Question 1 Cecil\'s Manufacturing is considering producing a new product. The sa

Question

Question 1 Cecil's Manufacturing is considering producing a new product. The sales price would be $9.75 per unit. The cost of the equipment is $109,000. Operating and maintenance costs are expected to be $2,900 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. Click here to access the TVM Factor Table Calculator Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT

Explanation / Answer

Annual worth (AW) of costs ($) = 109,000 x A/P(12%, 7) + 2,900 = 109,000 x 0.2191** + 2,900 = 23,881.9 + 2,900

= 26,781.9

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

AW of costs = Annual revenue

$26,781.9 = $9.75 x Q

Q = 2,747

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