Considering a capacity expansion investment

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Reference no: EM131450339

A manufacturing company is considering a capacity expansion investment at the cost of $250072 with no salvage value. The expansion would enable the company to produce up to 34261 parts per year and the useful life of the additional capacity is seven years. Each part would generate $4.42 net profit and annual operating and maintenance costs are estimated at $29336 per year. The market demand for the parts is unlimited, all parts produced will be sold. The MARR of the firm is 10%.

The minimum annual production rate to make this investment justifiable is:

Reference no: EM131450339

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