# Which alternative would you recommend?

###### Calculate the cost of common equity financing using Gordon Model
December 26, 2020
###### Describe the organizations current hiring needs and projected hiring needs for the coming year
December 26, 2020

A parts manufacturer plans to replace its existing facility with a new one The management is considering two possible capacities for the new facility: 200,000 or 250,000 units per year The 200,000 unit plan would have an annual fixed cost of \$40 million and a per unit production cost of \$20 The 250,000 unit plan would have an annual fixed cost of \$6 million and a per unit cost of \$15 The parts will be sold for an average price of \$60 per unit

a What would be the break even point for each capacity alternative

b Suppose that the company projects its sales to be 220,000 units per year Which alternative would you recommend? – For this part calculate the annual profit in each case

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## lavivabet giriş

trbet giriş - kronosslot -