Need to manufacure a particular amount per year a life


Problem:

Sac need to manufacure 100,000.00 per year a life of 5 years and no salvage value. The straight line method will be used and there will be depreciation, the average cost is $20.00/ the expected cost of $8 to manufacture the new equipment.

The initial investment is 3,000,000.00 to purchase

Tax rate 34%
Payback and IRR and NPV method used

% of capital    Rate of Return
Stocks    60%    14%
Bonds     40%    6%

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Finance Basics: Need to manufacure a particular amount per year a life
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