The Hammer Company Proposes to Invest $6 Million in a New

question 46

Multiple Choice

The Hammer Company proposes to invest $6 million in a new type of hammer-making equipment. The fixed costs are $0.5 million per year. The equipment will last for five years. The manufacturing cost per hammer is $1 and each hammer sells for $6. The cost of capital is 20 percent. Calculate the break-even sales volume per year. (Ignore taxes. Round to the nearest 1,000.)

• A)500,000 units
• B)600,000 units
• C)450,000 units
• D)550,000 units

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Definitions:

Unjust Enrichment

Refers to a situation where one party unfairly benefits at another's expense and is legally required to compensate the victim to correct the imbalance.

Implied Covenant

An unstated promise or clause in a contract, inferred by law to promote fairness and uphold the contract’s spirit.

Bonus Payment

Additional remuneration given to employees as a reward for their performance, beyond their normal salary.

Religious Discrimination

Unfair or prejudicial treatment of individuals or groups based on their religious beliefs or practices.