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This problem is aimed at understanding the breakeven selling price for a company. Assume you have started up a company for an initial investment called “Invest”. The return you expect is WACC. The investment can be written off over the length of the project n and depreciation is straight line. The selling price of your product is p and you sell v per year of it. The marginal tax rate is t. You have operating costs of O. Further assume O is proportional to x such that O = kx. Write down the equation for the breakeven price p of the product using the above terms and (A/PV, WACC, n). You will only get credit for the problem if you write the equation out exactly right !! (no partial credit).

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91236110

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