Makes the project acceptable at the market interest

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Reference no: EM132039910

Imaging you want to invest in a project with a lifetime of 5 years. The revenue of this project comes from selling products. Initiating the project requires $100,000 investment on non-depreciable assets with no salvage value. The operating cost is estimated as $50,000 in the first year (at the end of the interval). You expect to produce and sell 1000 units of products per year (consider the revenue at the end of intervals). Operating cost and products unit price will increase at the rate of average inflation which is estimated to be 5% over the lifetime of the project.

If the tax rate is 30%, what is the minimum price of the product (in constant dollar) that makes the project acceptable at the market interest rate of 15%?

(Report your answer in dollar amounts without any extra character. Answers such as 2Million; 2M; 2,000,000 or $2000000 are not acceptable)

Reference no: EM132039910

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