Cecil’s Manufacturing is considering production of a new product. The sales price would be $10.25 per unit. The cost of the equipment is $100,000. Operating and Maintenance costs are expected to be $3,500 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 break-even. Determine whether each of the following statements is true or false by determining the new break-even for each case. Each case is independent of the other cases. a. If the cost of the equipment doubles, the break-even volume will double. b. If the revenue per unit doubles, the break-even volume will halve. c. If the O&M costs double, the break-even volume will double.
Cecil’s Manufacturing is considering production of a new product. The sales price would be $10.25 per unit. The cost of the equipment is $100,000. Operating and Maintenance costs are expected to be $3,500 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 break-even. Determine whether each of the following statements is true or false by determining the new break-even for each case. Each case is independent of the other cases. a. If the cost of the equipment doubles, the break-even volume will double. b. If the revenue per unit doubles, the break-even volume will halve. c. If the O&M costs double, the break-even volume will double.
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