The Financial Calculator Company Proposes to Invest $12 Million in a New

Multiple Choice

The Financial Calculator Company proposes to invest $12 million in a new calculator-making plant. Fixed costs are $3 million per year. A financial calculator costs $10 per unit to manufacture and sells for $30 per unit. If the plant lasts for four years and the cost of capital is 20 percent, what is the break-even level of annual sales? (Assume that revenues and costs occur at the end of each year. Assume no taxes.) Round to the nearest 1,000 units.

A) 150,000 units
B) 342,000 units
C) 382,000 units
D) 300,000 units