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You are thinking of buying a small manufacturing plant that makes fishing lures. The purchase price for the plant is 15 million. Fixed costs of running the plant are 800,000 per year. The variable cost per lured produced is .45. The scrap rate is 5%. The lures sell for 3 each. You're evaluating the plant over an 8-year horizon. You'll finance the whole thing with a commercial bank loan having a 10% RATE. HOW MANY LURES WOULD YOU NEED TO MAKE EACH YEAR TO BREAKEVEN OVER THE 8 YEARS?

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Operation Management, Management Studies

Category:- Operation Management
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