Depreciation is straight-line to zero over project life

Assignment Help Financial Management

Reference no: EM131923686

Mosler Company has compiled this information for a new project:

Initial investment: $229,700

Fixed costs: $66,800

Variable costs: $5.07 per unit

Selling price: $12.99 per unit

Discount rate: 14 percent

Project life: 4 years

Tax rate: 34 percent

Depreciation is straight-line to zero over the project's life. What is the accounting break-even point?

11,301.82 units

13,200.00 units

15,684.97 units

10,352.08 units

12,388.60 units

2) Southern Goods is analyzing a proposed project using standard sensitivity analysis. The company expects to sell 4,500 units, ±11 percent. The expected variable cost per unit is $13 and the expected fixed costs are $12,000. Cost estimates are considered accurate within a ± 5 percent range. The depreciation expense is $5,000. The sale price is estimated at $22 a unit, ±2 percent

What is management's best guess of contribution margin value?

a. $ 2.67

b. $ 10.33

c. $9.00

d. $7.00

e. $8.72

Reference no: EM131923686

Questions Cloud

Determine the project feasibility-Payback-NPV-IRR-MIRR : calculate the criteria needed to determine the project feasibility; Payback, NPV, IRR, MIRR, PI.

Capital budgeting decision-proposed equipment purchase : Based on the above information calculate the following items for this proposed equipment purchase.

Implementing-deploying innovative technology project : What factors will influence your decision on implementing/deploying an innovative technology project?

What is the estimated NPV and OCF for project : What is the estimated OCF for this project? What is the estimated NPV for this project?

Depreciation is straight-line to zero over project life : Depreciation is straight-line to zero over the project's life. What is the accounting break-even point?

How to construct a portfolio consisting of shares of goof : Explain how to construct a portfolio consisting of shares of GOOF and appropriate options that would have the characteristics that Huey desires.

Write report on movie the founder : Write a report on a movie "The Founder"

Hand-to-mouth is currently cash-constrained : Hand-to-Mouth (H2M) is currently cash-constrained, and must make decision about whether to delay paying one of its suppliers or take out a loan.

Determine cost of dollar denominated call option on euro : Suppose that currently one euro costs $.88; that is, current exchange rate is $.88/€. Determine cost of dollar denominated call option on euro that has strike.

User Account

All Pages