Determine break-even selling price in todays dollars


Determine the break-even selling price ($/unit) in today's dollars required to achieve a 15% constant dollar (year 2018) rate of return assuming a 6% per year inflation rate. In today's dollars (year 2017), the project requires a $150,000 capital investment in the year 2018 and operating cost payments of $50,000 in years 2019, 2020, and 2021. We will produce 3400 units per year in years 2019, 2020, and 2021. Operating cost escalation is expected to be 5% per year from today. Capital cost escalation is expected to be 10% per year from today. We anticipate reducing the selling price 3% per year from today.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Determine break-even selling price in todays dollars
Reference No:- TGS02625504

Expected delivery within 24 Hours