The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven unit if the contribution margin is $20. 367 units 368 units 268 units None of the above а. b. с. d.

The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven unit if the contribution margin is $20. 367 units 368 units 268 units None of the above а. b. с. d.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...

See similar textbooks

Related questions

Q: 1. AAI, Inc., forecasts unit sales for a potential new product as follows: Year Units of Output…

A: Please see the table below. Since all the steps are sequential, I have converted the same into a…

Q: June Co. is evaluating a project requiring a capital expenditure of $620,000. The project has an…

A: Capital expenditure = 620,000 Salvage Value = 0 N = 4 Depreciation per year = Capital expenditure /…

Q: Project A costs $1,000, and its cash flows are the same in Years 1 through 10. Its IRRis 16%, and…

A: INITIAL INVESTMENT = 1000 IRR= 16% WACC = 8%

Q: The initial cost of a project is 2,180,441 and annual income is 597,733. The expected life to be 12…

A: Capital budgeting is the process in which various projects and alternatives are evaluated and…

Q: An iron ore of 50x10^6 ton was produced during 15 years and has been sold for $100 per ton Estimate…

A: The Net Present Value: The net of the present values of cash inflows and outflows of a project over…

Q: An investment costs $500,000 today and is expected to produce a one-time inflow at the end of year 8…

A: Investment amount (P) = $ 500000 Cash inflow after 8 years (FV) = $ 600000 Period (n) = 8 Years

Q: he irr of the project is 12% and the present value of operating cash flow is $ 22000 the life of the…

A: Break-even point is calculated by dividing the fixed cost by the contribution margin.

Q: 260 750,000 2 15,000 475 280 750,000 3 10,000 500 295 750,000 4 10,000 570 320

A: The measurement is given as,

Q: Quattro, Inc. has the following mutually exclusive projects available. The company has historically…

A: Mutually Exclusive Projects Required Return = 11% Cash Flows: Year Cash Flow (A) Cash Flow (B)…

Q: The initial cost of a project is 2,180,441 and annual income is 597,733 . The expected life to be 12…

A: Initial Cost = 2,180,441 Annual Income = 597,733 Life = 12 years MARR = 15%

Q: A Company is considering the investment on a project with initial investment of OMR 5,000,000. The…

A: The present value of future cash flows is a method of discounting cash that will be received in the…

Q: Maroc Group of Companies (MGC) Ltd is considering an investment in an equipment costing GHȻ80,000.…

A: Cost of Capital is the cut-off rate at which the company make profits on its investment so as to…

Q: The IRR of the project is 12% and the present value of operating cash flow is $22000. The life of…

A: The financial break-even is the level of point where company reached the position of zero net income…

Q: Project A costs $41400, its expected net cash inflows are $13400 per year for 8 years, and its WACC…

A: Here, The present value of net cash inflows is 'PVCI' Future value is 'FV' Cost of capital is 'r'…

Q: The year-end operating costs of a certain machine are estimated to be 120,000 the first year and to…

A: The question is related to equivalents uniform annual costs. Since the cost of maintainance is…

Q: For projects A and B determine the payback period(PBP) and the Account rate of return (ARR). The…

A: Payback period and accounting rate of return are tools to evaluate potential investment projects of…

Q: The accounting breakeven quantity is 7,440 units. The cash breakeven quantity is 6,800 units. Life…

A: Introduction: Break even point is the point at which there is not profit or loss. At this point…

Q: What is the financial break-even quantity?

A: Given information is: Accounting breakeven quantity = 7,440 units Cash breakeven quantity = 6,800…

Q: t A cos

A: Given information :

Q: A project with a useful life of eight years requires an investment of $200,000 and yields after tax…

A: Income after tax = $ 30,000 Investment = $ 200,000

Q: Three mutually exclusive design alternatives are being considered. The estimated cash flows for each…

A: Internal Rate of Return: When evaluating projects or investments, the internal rate of return is…

Q: The annual worth equivalent of a long-life project which has estimated revenues of $50,000 now,…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: A project costs $2.5 million up front and will generate cash flows in perpetuity of $240,000. The…

A: Project cost = $2.5 million Cash flows in perpetuity = $240,000 Cost of Capital = 9%

Q: project requires an initial investment of P300,000 on equipment. The project will generate sales…

A: Salvage value of equipment 0 as it will be sold at book value that is 300000, so no depreciation…

Q: XYZ Co. is evaluating whether to invest in a project with the following information: Project cost…

A: Depreciation = Cost of asset / Life Depreciation = $950,000 / 5 Depreciation = $190,000

Q: In 1-year the number of units sold will be revised either upward by 8,700 or downward by 4,300 with…

A: Given:

Q: Project A costs $67,775, its expected net cash inflows are $10,000 per year for 10 years, and its…

A: The modified internal rate or return(MIRR) is used to calculate equated worth of generated cash…

Q: Project A costs $3,000, and its cash flows are the same in Years 1 through 10. Its IRR is 14%, and…

A: Excel Spreadsheet:

Q: Three mutually excdusive design altematives are being considered. The estimated cash flows for each…

A: Before investing in new projects, companies evaluate the profitability of the project by using…

Q: A project produces annual net income of $15,250, $18,700, and $21,750 over three years,…

A: The average accounting rate of return is calculated as ratio of average income over life of project…

Q: A 17-year project has a cost of $900,000 and has annual cash flows of $140,000 in years 1-8, and…

A: NPV is the sum of present value of future cashflows less initial investment

Q: Bob Meo Co. Is considering a project that would have a five-year life and require a P2,400,000…

A: Calculation of Annual Net Cash Inflow= Net Operating Income + Depreciation= P400,000 + P300,000=…

Q: Determine the break-even quantity and margin of safety (units and value) if com sold 8,000 units of…

A: Break Even Point is the level of sales where the company neither earns any profits nor incurs any…

Q: A four-year life project has an initial capital expenditure of $3,000 and annual operating costs…

A: Escalation rate of income is 5% Escalation rate of costs is 6% Inflation rate is 3% Initial Capital…

Q: Three mutually exclusive design alternatives are being considered. The estimated cash flows for each…

A: IRR -Internal rate of return It is the discount rate which makes net present value (NPV) of a…

Q: Maroc Group of Companies (MGC) Ltd is considering an investment in an equipment costing GHȻ80,000.…

A: The cost of capital is the minimum required rate of return necessary to meet the optimum return on…

Q: The accounting breakeven quantity is 7,440 units. The cash breakeven quantity is 6,800 units. Life…

A: Break even point: It is the point where the company is at the situation where there is no profit or…

Q: You have been asked by MPAC Ltd to analyse two projects, X and Y. Each project costs £1,000,000, and…

A: Because you have asked question with multiple parts (MULTI PART) , we will solve the first 3 parts…

Q: Project A costs $67,775, its expected net cash inflows are $10,000 per year for 10 years, and its…

A: Cost of project = $ 67,775Expected net cash flow per year = $ 10,000WACC = 8% NPV = Present value of…

Q: What is the net present value of this project?

A: Net Present Value: It is the difference between the discounted cash inflows and cash outflow. The…

Q: The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of…

A: IRR= 12% PV of operating cash flow= $22,000 Project Life= 6 years Fixed cost= $2,000 per year…

Q: A proposed project that will generate annual sales $36,960. The annual fixed costs are $12,700 and…

A: Operating cash flows is the cash flows generated from normal operations of the company. It can be…

Q: The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of…

A: Financial breakeven is a point at which EPS of the company is equal to zero. It is a level before…

Q: any to be $430 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and…

A: The answer has been calculated using excel in the next sheet using the given below formulas in…

Q: man investment project, the initial cost of investment is $400,000. The annual revenues are expected…

A: We will have to use different tools of capital budgeting here. Simple payback and the internal rate…

Q: Using the annual cost data below, if industry considering producing 7,500 units per year, determine…

A: W.N. 1 Calculation of Depreciation per Year Description Project A Project B…

Q: Golden Co. is studying a project that would have a 10-year life and would require a $370,000…

A: The payback period will be used to evaluate projects and determine the number of years it will take…

Question

The IRR of the project is 12% and the present value of operating cash flow is $22,000. The
life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven
unit if the contribution margin is $20.
а.
367 units
b.
368 units
с.
268 units
d.
None of the above

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
The initial investment of a project is OMR 350,000 and its cash inflows are OMR 225,000 per year. In this case, the payback period of the project is: a. 0.642 yedrs b. 1.55 years c. None of these d. 4 years
The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven unit if the contribution margin is $20.
The investment required for a project is estimated at OMR 50,000. The cash flows expected from the project are: Year 1 OMR 22,000, Year 2 OMR 24,000 and Year 3 OMR 18,000. In this case, the Payback period of the project is: O a. None of these O b. 1.76 yedars O c. 2.22 years o d. 2.34 years
An investment project has the following characteristics: Cost, P22,820; Annual cash inflows, P5,000; internal rate of return, 12%. What is the useful life of the project? A. 7 years B. 12 years C. 4.56 years. D. It is impossible to determine from the data given
The total investment required for a project is estimated at OMR 90, 000. The cash flows expected from the project for the first four years are given below. Year Project A Year 1 18,000 Year 2 28,500 Year 3 42,000 Year 4 48,000 What will be pay back period? a. 3.03 b. 2.86 c. 2.63 d. All the options are wrong e. 3.23
A project with the required rate of return of 11.2% provides annual cash flows of $2,810 during the years 1 - 3, nothing during the years 4 - 5 and $5,550 during the years 6 -7. The project costs $12,200 today. What is the IRR of the project? 8.10% 8.67% 7.54% 11.7% 12.32%
Determine the ROR, AW, and PP of the following engineering project when the MARR is 20% per year. Is the project acceptable? Engineering Project Details Investment cost $60,000 Expected life 7 years Annual receipts $15,000 Annual expenses $2,675.40 a. The Rate of Return of the project is ? Write the answer in percentage value, up to 2 decimal places. b. How much is the cash flow excess? Roundoff answer to the whole number. c. The payback Period is Write the answer in two decimal places.
A project has an initial outlay of $1,567. The project will generate annual cash flows of $443 over the 5-year life of the project and terminal cash flows of $345 in the last year of the project. If the required rate of return on the project is 19%, what is the net present value (NPV) of the project? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
The total investment required for two projects are estimated at OMR90, 000. The cash flows expected from the two projects for the first four years are explained in the table below. Year Project A Year 1 25,000 Year 2 38,500 Year 3 42,000 Year 4 48,000 What will be pay back period? a. 3.03 O b. 3.23 O c. 2.86 O d. All the options are wrong e. 2.63
The irr of the project is 12% and the present value of operating cash flow is $ 22000 the life of the project is 6 years and fixed is $ 2000 per year compute the financial breakven unit the contribution margin is $20
A project has the following cash flows. It costs $15,000. It briongs in $22,000 after one year, and costs an adittional $6,500 after two years. The Required rate of return is 11%. Calculate the MIRR using the combination approach.