Question: Refer to the same information given in the first question and now assume that the company have an option to expand and be able to
Refer to the same information given in the first question and now assume that the company have an option to expand and be able to produce a maximum of bicycles per month. To make this happen, the company would need to invest six months before they can start utilising the new capacity. Once they start utilising their new capacity, the monthly fixed costs would go up by At the same time, to ensure all the produced bicycles can be sold, the company would need to reduce the selling price to per bicycle. Assuming the cost of producing a bicycle and the capacity utilisation is the same before and after the increase in capacity, do the necessary calculations to find out how long would it take the company to recover counting from the moment the money is invested?
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