What is the breakeven amount of ads

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A Yellow Pages directory company must decide whether it should compose the ads for its clients inhouse or pay a production company to compose them. To develop the ads inhouse, the company will have to purchase computers, printers, and other peripherals at a cost of $15,000. The equipment will have a useful life of 5 years, after which it will be sold for $3000. The employee who creates the ads will be paid $40.000 per year. In addition, each ad will have an average cost of $9 to prepare for delivery to the printer. Alternatively, the company can outsource ad development at a fee of $22 per ad regardless of the quantity. The current interest rate is 8% per year. What is the breakeven amount of ads?

Reference no: EM131927007

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