Invested in new manufacturing system

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Reference no: EM131893556

Tristan's Toys invested in a new manufacturing system. The initial cost was $287783. Annual costs are projected to be $187161, increasing by 11% each subsequent year. The system will require a substantial overhaul of $41968 at the end of year 9. The line is estimated to have a lifespan of 12 years.

The company projects it will sell 59296 units the first year, with the number of units sold increasing by 39957 units each subsequent year. What is the minimum price that the company must charge per unit to breakeven on the investment? Use a MARR of 4% compounded annually to make the calculation.

Note- please use compound interest factors if possible and use annual worth instead of present worth. I have tried this problem a couple of times with present worth and keep getting it wrong and would like to see another way of doing it.

Reference no: EM131893556

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