Cougar Telemarketing Is Considering Establishing a Call Center

Essay

Cougar Telemarketing is considering establishing a call center. The initial cost will be
$2,750,000 with a $27,500 market value any time within a 13- year period. The fixed cost of the center will be $830,000 per year with an average variable cost of $3.00 per call. Cougar expects to generate revenue of $5.25 per call with a capacity of 110,000 calls for the first year. The company also expects to increase the capacity uniformly each year. At an interest rate of 2% per year, determine the uniform amount the capacity must increase each year so that the company can recover its investment in 3 years.