The Solar Calculator Company Proposes to Invest $5 Million in a New

Multiple Choice

The Solar Calculator Company proposes to invest $5 million in a new calculator-making plant. Fixed costs are $2 million per year. A solar calculator costs $5 per unit to manufacture and sells for $20 per unit. If the plant lasts for three years and the cost of capital is 12 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) 133,000 units
B) 272,000 units
C) 228,000 units
D) 244,000 units