You Are Hired as a Consultant to Decide If Your

question 7

Multiple Choice

You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?

• A) The company will recover its initial investment.
• B) The company's total margin will be less than its investment.
• C) It is a good investment.
• D) The break-even is lower than the 15,000 units that are expected to sell.
• E) All of these choices are correct.

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Definitions:

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A close and enduring social relationship between two individuals involving mutual affection and support.

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