Birch company normally produces and sells 43,000 units of rg-6 each month. the selling price is $25 per unit, variable costs are $17 per unit, fixed manufacturing overhead costs total $155,000 per month, and fixed selling costs total $50,000 per month.

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase