Suppose a Manager Is Deciding Whether or Not to Purchase

Multiple Choice

Suppose a manager is deciding whether or not to purchase a piece of equipment to make an input internally and has completed the majority of the net present value (NPV) calculations. The manager has correctly calculated the NPV to be equal to: NPV = ($1.052 × Q) - $250,000, where Q is the annual quantity of the input the firm needs. In order for the NPV to be positive, the firm needs at least _______units of the input each year.

A) 220,890
B) 237,643
C) 115,960
D) 259,600