A company bought land one year prior to start-up for 100,000$. Total capital investment spent at the start up excluding the land cost was 1 million $ of which 80% was fixed capital investment. Product cost except depreciation was 200,000$. Assume all fixed capital investment can be depreciable with straight line for 10 years of life of the project. After 10 years all depreciable items can be sold for 50,000$. If the capacity of the plant is 100,000 unit/year, present value of the investment is 800,000$, determine the price of the product. (tax rate is 20%, i=0.05).

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The land bought one year prior is a sunk cost and will not be included in the present value calculat... View the full answer