Compute the minimum number of toy cars needed to be sold


Kids Inc. just purchased a $400,000 machine to launch its 3-year project of toy car production. The machine will be fully depreciated to zero by the straight-line method over its five-year economic life, and will be sold for $200,000 at the termination of the 3-year project. The variable cost is $20 per toy car, and annual fixed production costs are $250,000. The expected unit price of the toy car is $35. The marginal tax rate is 34% and the discount rate is 14%. Compute the minimum number of toy cars needed to be sold annually for this 3-year project to generate zero NPV.

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Finance Basics: Compute the minimum number of toy cars needed to be sold
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