Calculated using stright-line down to zero salvage value

Assignment Help Financial Management

Reference no: EM131061120

A company is considering a 5-year project that opens a new product line and requires an initial outlay of $85,000. The assumed selling price is $97 per unit, and the variable cost is $63 per unit. Fixed costs not including depreciation are $20,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 11% per year, what is the financial break-even point?

Reference no: EM131061120

Questions Cloud

About the usefulness of MIRRs : Look again at the project cash flows in Problem 10 below. C0 C1 C2 C3 -3,000 3,500 4,000 -4,000 Calculate the modified IRR as defined in Footnote 4 in section 5-3. Assume the cost of capital is 12%. Which is more meaningful? If you can’t decide, what..

Does this article help explain human origins : Who wrote this article, what is its title, and where and when was it published? Write a brief summary of the discovery being presented.

Recovery amount attributable to net working capital : Keyser Mining is considering a project that will require the purchase of $980,000 in new equipment. The equipment is in a seven-year MACRS class. The equipment can be scrapped at the end of the project for 5 percent of its original cost. What is the ..

Conceptual model to explain changes : The constant growth model is used in textbooks as a conceptual model to explain changes in stock prices. Is the model also of value for the actual valuation of stocks?

Calculated using stright-line down to zero salvage value : A company is considering a 5-year project that opens a new product line and requires an initial outlay of $85,000. The assumed selling price is $97 per unit, and the variable cost is $63 per unit. Fixed costs not including depreciation are $20,000 pe..

When they first become millionaires : Erika and kitty just reached their 25th birthday. Each plans to make a $5,000 semi annual contribution to her "early retirement fund" on her birthday, beginning today. Erika opened an account with a fund that earns 6% compounded semi-annually. Kitty ..

Ordinary annuity or annuity due : Suppose you inherited $275,000 adn invested it at 8.25% quarterly. How much could you withdraw at the end of 5 months? Does this question deal with the PV or FV of a LumpSum, Ordinary Annuity or Annuity Due? What is the formula you would use if you d..

What annual rate of return is the investment offering : You are told that if you invest $10,000 per month starting today for 19 years, you will have accumulated $573,000 at the end of the period. What annual rate of return is the investment offering? Does this question deal with LumpSum, Ordinary Annuity ..

Aspect of microfinance institutions : Microfinance play a very important role today, especially in poverty reduction. However, MFIs faces a great challenge in the realization of this objective. what are some of the measures can you recommend for improving the various aspect of Microfi..

User Account

All Pages