Alice is a chemical engineer and invented a machine that will solve the global warming in 10
Question:
Alice is a chemical engineer and invented a machine that will solve the global warming in 10 years. For this to happen, millions of this device should be purchased and used in as many location as possible. The device is about the size of a refrigerator.It sucks the air and captures all particles and carbon dioxide.It packs the carbon dioxide in a solid form which could be stored harmlessly.The production requires $250 billion dollar investment in plant and equipment.The economic life of the plant is 10 years due to fast change in the technology.The investment in plant and equipment will be depreciated over 10 years using a straight-line depreciation method.The assumed salvage value and the actual market value of the plant at the end of 10thyear are expected to be zero.The marginal tax rate is 21 percent, and the opportunity cost of capital is 10 percent.Each unit will be sold for $25,000 apiece.The direct labor and material cost is $15,000.What is the break-even production level for the net present value, that is, how many units should be produced to have zero net present value?
8,381,666 units
4,485,614 units
4,385,322 units
7,650,171 units