13. What is the quantity of sales at which the NPV of the project is zero? Investment= $500,000; variable cost= $120; fi...
13. What is the quantity of sales at which the NPV of the project is zero? Investment= $500,000; variable cost= $120; fixed cost= $65,000; product price= $150; life = 6 years; Ignore taxes and NWC. Required return rate= 14%.
- 5,415 units
- 5,772 units
- 5,993 units
- 6,453 units
- 6,663 units
Homework Answers
![Cash flow per year should be = $ 128,578.75 [ 500000/(PVIFA(14%,6 years) ] Quantity to be = 6,453 units (128578.75+65000)/(15](http://img.homeworklib.com/questions/1cc81410-2a0d-11ea-8c38-d90622de7cbb.png?x-oss-process=image/resize,w_560)
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13. What is the quantity of sales at which the NPV of the project is zero? Investment= $500,000; variable cost= $120; fi...
13. What is the quantity of sales at which the NPV of the project is zero?...
13. What is the quantity of sales at which the NPV of the project is zero? Investment= $500,000; variable cost= $120; fixed cost= $65,000; product price= $150; life = 6 years; Ignore taxes and NWC. Required return rate= 14%. Please provide entire equation used. 5,415 units 5,772 units 5,993 units 6,453 units 6,663 units
12) A project has an accounting break-even quantity of 28,700 units, a cash break-even quantity of...
12) A project has an accounting break-even quantity of 28,700 units, a cash break-even quantity of 17,120 units, a life of 10 years, fixed costs of $178,000, variable costs of $18.40 per unit, and a required return of 14 percent. Depreciation is straight-line to zero over the project life. Ignoring taxes, what is the financial break-even quantity? A) 39,723 units B) 39,624 units C) 39,201 units D) 39,320 units E) 39,458 units please show step by step using all break-evens
1. XYZ is considering a project with the following data: Sales Revenue = $500,000 Pre-tax Cannibalization cost = $50,000 Asset Cost = $450,000 Straight line depreciation over 3 years with zero salvage...
1. XYZ is considering a project with the following data: Sales Revenue = $500,000 Pre-tax Cannibalization cost = $50,000 Asset Cost = $450,000 Straight line depreciation over 3 years with zero salvage value Operating costs = $250,000 (does not include depreciation) Tax Rate 21% a. What is the after-tax cash flow? Assume a cost of capital of 10% and that the cash flows are constant for 3 years. What is the NPV? b. What is the NPV if we need...
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost:...
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 80 $ 60 $460,000 40,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 5% higher or 5% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.2 million, which will be depreciated straight-line...
A project has an estimated sales price of $71 per unit, variable costs of $44.03 per...
A project has an estimated sales price of $71 per unit, variable costs of $44.03 per unit, fixed costs of $57,000, a required return of 14 percent, an initial investment of $79,500, no salvage value, and a life of four years. Ignore taxes. What is the degree of operating leverage at the financial break-even level of output?
To solve the bid price problem presented in the text, we set the project NPV equal to zero and fo...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems Romo Enterprises needs someone to supply it with 124,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've...
Q3. (25 marks)Lower BoundExpected ValueUpper BoundSales quantity Sales price per unit Variable cost per unit Fixed...
Q3. (25 marks)Lower BoundExpected ValueUpper BoundSales quantity Sales price per unit Variable cost per unit Fixed cost95001000010500$9.75$10.00$10.25$4.80$5.20$5.60$15,000.00$18,000.00$21,000.00Initial requirement for equipment: S120,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value. Required rate of return: 15% Marginal tax rate: 35%Calculate NPV according to best case scenario.
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost:...
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 60 $ 40 $420,000 47,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $2.1 million, which will be depreciated straight-line...
8. Consider the following production-oriented project. The units produced will sell for $28/unit and can be...
8. Consider the following production-oriented project. The units produced will sell for $28/unit and can be produced at a variable cost of $20/unit. Fixed costs are $80K. The purchase price for the project is $200K, de preciable down to zero over a four-year life. The project has no salvage value. Ignore taxes, but use a 10% re- quired return when evaluating this project. (a) Calculate the accounting break-even quantity. (b) Calculate the cash-flow break-even quantity. (c) Calculate the financial break-even...
Table 13-5 The Flying Elvis Copter Rides Quantity Total Cost Fixed Cost Variable cost Marginal Cost...
Table 13-5 The Flying Elvis Copter Rides Quantity Total Cost Fixed Cost Variable cost Marginal Cost Average Fixed Cost Average Nariable Cost Average Total Cost SO B D IF 0 1 2 3 $50 $150 G IM $50 A H IN C $120 IE K $120 Q R Refer to Table 13-5. What is the value of L? $60 $135 $240 5270
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 80 $ 60 $460,000 40,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 5% higher or 5% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.2 million, which will be depreciated straight-line...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems Romo Enterprises needs someone to supply it with 124,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've...
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 60 $ 40 $420,000 47,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $2.1 million, which will be depreciated straight-line...
8. Consider the following production-oriented project. The units produced will sell for $28/unit and can be produced at a variable cost of $20/unit. Fixed costs are $80K. The purchase price for the project is $200K, de preciable down to zero over a four-year life. The project has no salvage value. Ignore taxes, but use a 10% re- quired return when evaluating this project. (a) Calculate the accounting break-even quantity. (b) Calculate the cash-flow break-even quantity. (c) Calculate the financial break-even...
Table 13-5 The Flying Elvis Copter Rides Quantity Total Cost Fixed Cost Variable cost Marginal Cost Average Fixed Cost Average Nariable Cost Average Total Cost SO B D IF 0 1 2 3 $50 $150 G IM $50 A H IN C $120 IE K $120 Q R Refer to Table 13-5. What is the value of L? $60 $135 $240 5270
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