Hammer Company Proposes to Invest $6 Million in a New

Multiple Choice

Hammer Company proposes to invest $6 million in a new type of hammer-making equipment. The fixed costs are $1 million per year. The equipment will last for five years. The manufacturing cost per hammer is $1 and each hammer sells for $6. The cost of capital is 20 percent. Calculate the break-even sales volume per year. (Ignore taxes. Round to the nearest 1,000.)

A) 500,000 units
B) 550,000 units
C) 600,000 units
D) 650,000 units