In Order to Produce a New Product, a Firm Must

question 49

Multiple Choice

In order to produce a new product, a firm must lease equipment at a cost of $25,000 per year. The managers feel that they can sell 10,000 units per year at a price of $15.00. What is the highest variable cost that will allow the firm to at least break even on this project?

• A) $12.50.
• B) $13.50.
• C) $14.50.
• D) $15.50.
• E) $16.50.

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Definitions:

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Semi-Annual Interest

Interest payments made two times a year on a loan or investment.

Annual Interest

The amount of interest to be paid or earned over a year, often related to loans, savings, or investments.

Current Monetary Liability

A short-term financial obligation that is expected to be settled within a year using cash or other monetary resources.