You are considering investing in a company that cultivates abalone for sale to local restaurants. Use...
|
You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information: |
| Sales price per abalone | = | $43.30 |
| Variable costs per abalone | = | $10.60 |
| Fixed costs per year | = | $446,000 |
| Depreciation per year | = | $133,000 |
| Tax rate | = | 23% |
|
The discount rate for the company is 15 percent, the initial investment in equipment is $931,000, and the project’s economic life is 7 years. Assume the equipment is depreciated on a straight-line basis over the project’s life and has no salvage value. A) What is the financial break even level for the project? |
Homework Answers
Financial Break even point is the level at which EBIT is sufficient to pay off fixed financial costs i.e. interest
i.e. Fixed costs/Gross Margin %
= (133,000+446,000)/75.52%
= $766,684.32
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You are considering investing in a company that cultivates
abalone for sale to local restaurants. Use...
You are considering investing in a company that cultivates abalone for sale to local restaurants. Use...
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