Question

Calpine Company has the following information related to a new project: Initial investment: $980,000; Fixed costs: $230,000; Variable costs: $11.80 per unit; Selling price: $28.50 per unit; Discount rate: 14 percent; Project life: 8 years; Tax rate: 25 percent. Fixed assets are depreciated using straight-line depreciation over the project's life. What is the financial break-even point?

28,194 units |
||

27,615 units |
||

26,534 units |
||

25,418 units |
||

29,093 units |

Answer #1

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CAlc:

Grace P. has compiled this information related to a new project:
Initial investment: $1,550,000; Fixed costs: $420,000; Variable
costs: $8.10 per unit; Selling price: $28.80 per unit; Discount
rate: 14 percent; Project life: 6 years; Tax rate: 25 percent.
Fixed assets are depreciated using straight-line depreciation over
the project's life. What is the financial break-even point? 38,522
39,211 40,286 41,804 42,374

Grace P. has compiled this information related to a new project:
Initial investment: $1,550,000; Fixed costs: $420,000; Variable
costs: $8.10 per unit; Selling price: $28.80 per unit; Discount
rate: 14 percent; Project life: 6 years; Tax rate: 25 percent.
Fixed assets are depreciated using straight-line depreciation over
the project's life. What is the financial break-even point?
38,522
39,211
40,286
41,804
42,374

the quorum company has a prospective 6 year project that
requires initial fixed assets costing $963,000, annual fixed costs
of $403,400, variable costs per unit of $123.60, a sales price per
unit of $249, a discount rate of 14 percent, and a tax rate of 21
percent. the asset will be depreciated straight-line to zero over
the life of the project.
explain why as a manager calculating accounting break-even sales
quantity and financial break-even sales quantity are important.

the quorum company has a prospective 6 year project that
requires initial fixed assets costing $963,000, annual fixed costs
of $403,400, variable costs per unit of $123.60, a sales price per
unit of $249, a discount rate of 14 percent, and a tax rate of 21
percent. the asset will be depreciated straight-line to zero over
the life of the project.
compute the financial break-even sales quantity

the quorum company has a prospective 6 year project
that requires initial fixed assets of $963,000, annual fixed
$403,400, variable costs $123.60 per unit, sales price of $249,
discount rate 14%, tax rate 21%. asset straight line depreciated to
zero over life of project.
compute accounting break even sales
compute financial break even quantity

The Mini-Max Company has the following cost information on its
new prospective project: Initial investment: $700 Fixed costs are $
200 per year Variable costs: $ 3 per unit Depreciation: $ 140 per
year Price: $8 per unit Discount rate: 12% Project life: 3 years
Tax rate: 34% Assume that you sell the machine for book value at
the end of year 3 so there is no capital gain or loss on the
initial investment. How many units per year...

A project with a life of 10 has an initial fixed asset
investment of $40,320, an initial NWC investment of $3,840, and an
annual OCF of –$61,440. The fixed asset is fully depreciated over
the life of the project and has no salvage value. If the required
return is 9 percent, what is the project's equivalent annual cost,
or EAC?
$-64,664.85
$-57,858.03
$-43,683.88
$-71,471.68
$-68,068.27
A gym owner is considering opening a location on the other side
of town. The...

A company is considering a new project requiring an upfront
fixed-asset investment of $1,000,000 with an economic life of five
years. Depreciation is taken on a straight-line basis, with no
expected salvage value. Net working capital required immediately is
expected to be $100,000 and will be recovered in full upon the
project's completion in five years. In the pessimistic-scenario
forecast, the annual sales volume is 44,700 units, while the sale
price is $143 per unit with a variable cost of...

A company is considering a new project requiring an upfront
fixed-asset investment of $1,000,000 with an economic life of five
years. Depreciation is taken on a straight-line basis, with no
expected salvage value. Net working capital required immediately is
expected to be $100,000 and will be recovered in full upon the
project's completion in five years. In the optimistic-scenario
forecast, the annual sales volume is 58,200 units, while the sale
price is $150 per unit with a variable cost of...

The Quorum Company has a prospective 6-year project that
requires initial fixed assets costing $962,000, annual fixed costs
of $403,400, variable costs per unit of $123.60, a sales price per
unit of $249, a discount rate of 14 percent, and a tax rate of 21
percent. What is the present value break-even point in units per
year?
A. 4,995
B. 5,852
C. 6,144
D. 5,375
E. 6,081

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