Question: Two alternatives exist for a production process. Alternative 1 has an initial cost of $10,000 and a salvage value of $1000 after 5 years. This

Two alternatives exist for a production process.

Two alternatives exist for a production process. Alternative 1 has an initial cost of $10,000 and a salvage value of $1000 after 5 years. This alternative also has a variable cost of $1 /unit of product produced and an annual maintenance of $1000. Alternative 2 has an initial cost of $15,000 and a salvage value of $2,000 after 7 years. Alternative 2 also has a variable cost of $0.80 /unit of product produced and an annual maintenance cost of $1200. What is the breakeven point in annual production volume? Assume a discount rate of 10%. (5 points)

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