FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Zira Ltd sells mobile gadgets for 15 each. The gadgets have a variable cost of 4 per unit, and
Products' fixed operating costs are 220,000 per year.
Products' capital structure includes 55% debt and 45% equity.
Annual interest expense is 25,000, and the tax rate is 35%.
a. Calculate the break-even point in units.
b. If the Products sells 25,000 units, calculate the firm's EBIT and net income.
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Transcribed Image Text:Zira Ltd sells mobile gadgets for 15 each. The gadgets have a variable cost of 4 per unit, and Products' fixed operating costs are 220,000 per year. Products' capital structure includes 55% debt and 45% equity. Annual interest expense is 25,000, and the tax rate is 35%. a. Calculate the break-even point in units. b. If the Products sells 25,000 units, calculate the firm's EBIT and net income.
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