A Factory That Produces Pipe Costs 5,000,000 to Set Up

Multiple Choice

A factory that produces pipe costs 5,000,000 to set up and has an annual capacity of 50,000 units. The production cost is 0.5 per unit and this cost is not expected to change. The machines have an indefinite physical life, and the cost of capital is 10 percent. What is the competitive price of a pipe?

A) 5) 5
B) 10
C) 15
D) 16.5