Corporate Finance
Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 7, Problem 10QAP
Summary Introduction

To calculate: Financial break-even level.

Introduction: Break-even point is the point at which the seller or the owner earns zero profit and zero loss. This is the point from which the owner starts earning profit by selling additional units in the market.

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Chartreuse Co. has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of four years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $468,000. The sales price per pair of shoes is $59, while the variable cost is $13. Fixed costs of $167,000 per year are attributed to the machine. The corporate tax rate is 22 percent and the appropriate discount rate is 7 percent. What is the financial break-even point? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Financial break-even 6,173.91 units
Martinez, Incorporated, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 5 years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $570.000 The sales price per pair of shoes is $83, while the variable cost is $34. Fixed costs of $275.000 per year are attributed to the machine. The corporate tax rate is 23 percent and the appropriate discount rate is 9 percent. What is the financial break-even point? (Do not round intermediate calculations and round your answer to 2 decimal places. e.g., 32.16) Financial break-even point units
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $530,000. The sales price per pair of shoes is $75, while the variable cost is $27. Fixed costs of $235,000 per year are attributed to the machine. The corporate tax rate is 21 percent and the appropriate discount rate is 8 percent.    What is the financial break-even point? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32)
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