Determine the maximum purchase price

Reference no: EM132165007

Question: The annual demand for widgets has been determined to be 10,000 per year. Each widget sells for $4.00 and costs $2.25 to produce. Using breakeven analysis and an interest rate of 12%, determine the maximum purchase price that could be paid for the required machinery. The machine is expected to last 8 years and to have a salvage value of 5% of the purchase price.

Reference no: EM132165007

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