Demerara Icehouse Inc. is considering a new investment in ice-making. The new equipment costs $6 million, fixed

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Demerara Icehouse Inc. is considering a new investment in ice-making.

The new equipment costs $6 million, fixed annual costs are $0.5 million, variable costs $1 per ice block and it sells for $6. The company uses a hurdle rate of 20%. The equipment will last of 5 years.

Calculate the break-even (i.e., NPV = 0) sales volume per year.

(Ignore taxes. Round to the nearest 1,000.)

Related Book For answer-question

Fundamentals of corporate finance

ISBN: 978-0073382395

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Posted Date: Dec 21, 2022 03:43 AM

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Demerara Icehouse Inc. is considering a new investment in ice-making. The new equipment costs $6 million, fixed

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Breakeven ie NPV 0 Sales Volume per year To calculate the breakeven sales volume we must first calculate the net present value NPV of the investment T... View the full answer

Fundamentals of corporate finance

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