What should be minimum annual sales to justify investment


The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000 and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: What should be minimum annual sales to justify investment
Reference No:- TGS071937

Expected delivery within 24 Hours