What is dol at financial breakeven level

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Reference no: EM131868058

1. A project has the following information. Price is $62 per unit, variable cost is $41 per unit, fixed costs is $15500, required return is 12%, initial investment $24000, project life is 4 years. Ignoring taxes,

a) What’s accounting breakeven

b) What’s cash breakeven

c) What’s financial breakeven?

d) What’s DOL at financial breakeven level?

2. Molineux corp. has market value of equity at $20 billion, and its debt book value is $4 billion. Its cost of equity is 12%, and pretax cost of debt of 7%. Its tax rate is 35%.

a) What’s the company’s capital structure?

b) What’s the after tax cost of debt?

c) What’s the company’s WACC?

Reference no: EM131868058

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