Merowak Missiles has developed its Democratizer Offensive Weapon System (DOWS) for the US military. After sinking $1 billion int
o R&D and design, it spent $0.5 billion building the tools and production facility that are unique to DOWS production. It houses these in standard factory floor space that costs $1 million. Each missile has a marginal cost of $2,000. The Pentagon is thinking of discontinuing the program because the missiles are too expensive. If Merowak were to get an order for 50,000 missiles, what would its breakeven price be?
Recovery is saving, that is, releasing immobile,
inoperative, or abandoned equipment from its current location and returning it
to operation or to a repairs site for maintenance. These actions typically
involve towing, lifting, or winching. The answer here is self-recovery. Actions
necessitate using only the equipment’s assets. Self-recovery starts at the place
where the equipment becomes caught up or disabled. The operator or crew uses
the accessible recovery objects to carry out self-recovery.
The future amount of the current investment/credit with interest that is compounded annually can be calculated through the equation, F = P x (1 + r)^n where F is the future amount, P is the principal, r is the decimal equivalent of the given rate, and n is the number of years. Substituting the known values, F = ($125,000) x (1 + 0.06)^3 = $148,877 The interest is therefore, I = $148,877 - $125,000 = $23,877