PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 10, Problem 12PS
a
Summary Introduction
To calculate: The accounting break-even sales level, if the company pays no taxes.
b.
Summary Introduction
To calculate: The
c.
Summary Introduction
To discuss: The accounting break-even of the sales if the company pays the tax rate at 20%.
d.
Summary Introduction
To calculate: The net present value break-even of the sales level, if the firm pays the rate of tax at 20%.
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Break-even analysis (S10.2) Assume a product can be sold for $80 each. Non-depreciation fixed
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will be depreciated straight-line over its useful life of five years to a final value of zero, and the
discount rate is 10%.
What is the accounting break-even level of sales if the firm pays no taxes?
O
O
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Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $3,000 per year, and variable costs are $30 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.
a. What is the accounting break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Accounting break-even level of sales: 120 units
b. What is the NPV break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
NPV break-even level of sales: 126 units
c. What is the accounting break-even level of sales if the firm’s tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Accounting break-even level of sales: 120 units
d. What is the NPV break-even level…
Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $1,400 per year, and variable costs are $30 per unit. the initial investment of $5,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 12%.
a). What is the accounting break-even level of sales if the firm pays no taxes?
b).What is the NPV break even level of sales if the firm pays no sales?
c). What is the accounting break even level of sales if the firms tax rate is 20%/
d). What is the NPV break even level of sales if the firms tax rate is 20%?
Chapter 10 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 10 - Terminology Match each of the following terms to...Ch. 10 - Project analysis True or false? a. Sensitivity...Ch. 10 - Sensitivity analysis Otobais staff (see Section...Ch. 10 - Prob. 4PSCh. 10 - Prob. 7PSCh. 10 - Scenario analysis What is the NPV of the electric...Ch. 10 - Prob. 9PSCh. 10 - Break-even analysis Break-even calculations are...Ch. 10 - Prob. 11PSCh. 10 - Prob. 12PS
Ch. 10 - Prob. 13PSCh. 10 - Break-even analysis A financial analyst has...Ch. 10 - Fixed and variable costs In a slow year, Deutsche...Ch. 10 - Operating leverage You estimate that your cattle...Ch. 10 - Prob. 17PSCh. 10 - Prob. 20PSCh. 10 - Real options Explain why options to expand or...Ch. 10 - Prob. 22PSCh. 10 - Real options True or false? a. Decision trees can...Ch. 10 - Prob. 24PSCh. 10 - Real options An auto plant that costs 100 million...Ch. 10 - Decision trees Look back at the Vegetron electric...Ch. 10 - Prob. 27PSCh. 10 - Prob. 28PSCh. 10 - Prob. 29PSCh. 10 - Prob. 32PS
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