Question

Given the following forecasted data, determine the number of planes that the company must produce in...

Given the following forecasted data, determine the number of planes that the company must produce in order to break even, on both accounting basis and NPV basis assuming 6years as life of project.

the project initial investment is $900 million, each plane sold for $15.5 million, the variable cost is $8 million each plane, the fixed cost is $150 million, the depreciation uses straight-line method, tax rate is 40% and the company’s cost of capital is 10%.

Please explain work as much as possible.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Given the following forecasted data, determine the number of planes that the company must produce in...
Given the following forecasted data, determine the number of planes that the company must produce in order to break even, on both accounting basis and NPV basis assuming 6years as life of project. The project initial investment is $900 million, each plane sold for $15.5 million, the variable cost is $8 million each plane, the fixed cost is $150 million, the depreciation uses straight-line method, tax rate is 40% and the company’s cost of capital is 10%. Please explain work...
Given the forecasted data, determine the number of planes that the company must produce in order...
Given the forecasted data, determine the number of planes that the company must produce in order to break even, on both accounting basis and npv basis. The 10-year project initial investment is 1,000 million, each plane sold for 15 million, the variable cost is 7 million each plane, the fixed cost is 150 million, the depreciation is the straight-line method, tax rate is 40% and the company's cost of capital is 12%. please show all work.
A project cost $1 initial million investment and would depreciate straight line to 0 in 10...
A project cost $1 initial million investment and would depreciate straight line to 0 in 10 years. Besides depreciation, the variable cost is 60% of sales and fixed cost is $100,000 per year. Assume the income tax of 21%. Which BE in accounting is 500,000. If the discount rate is 8%, what is the NPV break even of sales?
Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life...
Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will produce net cash flows of $30 million per year. Plane B has a life of 10 years, will cost $132 million, and will produce net cash flows of $25 million per year. Shao plans to serve the route for only 10 years. Inflation in operating costs, airplane costs, and fares is expected to be zero,...
XYZ Co. is evaluating whether to invest in a project with the following information: Project cost...
XYZ Co. is evaluating whether to invest in a project with the following information: Project cost = $950,000 Project life = five years Projected number of units sold per year = 10,000 Projected price per unit = $200 Projected variable cost per unit = 150 Fixed costs per year = $150,000 Required rate of return = 15% Marginal tax rate = 35% Assume straight-line depreciation to zero over five years, and ignore the half-year rule for accounting for depreciation. Calculate...
The Even Cut Co. is considering opening a new plant to produce lawn mowers. The initial...
The Even Cut Co. is considering opening a new plant to produce lawn mowers. The initial cost of the project is $6 million. This cost will be depreciated straight-line to a zero book value over the 15-year life of the project. The net income of the project is expected to be $137,000 a year for the first four years and $538,000 for years 5 through 15, respectively. What is the average accounting return on this project? 14.37 percent
The Even Cut Co. is considering opening a new plant to produce lawn mowers. The initial...
The Even Cut Co. is considering opening a new plant to produce lawn mowers. The initial cost of the project is $6 million. This cost will be depreciated straight-line to a zero book value over the 15-year life of the project. The net income of the project is expected to be $137,000 a year for the first four years and $538,000 for years 5 through 15, respectively. What is the average accounting return on this project? why average net investment...
Problem 10-11 Break-Even (LO3) Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond...
Problem 10-11 Break-Even (LO3) Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $70. The fixed costs incurred each year for factory upkeep and administrative expenses are $215,000. The machinery costs $2.3 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of number of diamonds sold? b. What...
Consider a project with the following data: accounting break-even quantity = 30,229 units; cash break-even quantity...
Consider a project with the following data: accounting break-even quantity = 30,229 units; cash break-even quantity = 17,933 units; life = 9 years; fixed costs = $205,385; variable costs = $21 per unit; required return = 12 percent; depreciation = straight line. Ignoring the effect of taxes, what is the financial break-even quantity?
4. Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold...
4. Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The material cost for a standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero. a) What is the accounting break-even level of annual sales in terms of number of diamonds sold? Assume the company is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT