What is the economic break-even point of sale

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Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line and there is no anticipated salvage value. The machine costs $575,000. The sales price per pair of shoes is $60, while the variable cost is $14. The $165,000 of fixed costs per year are attributed to the machine. Assume that the corporate tax rate is 34% and the appropriate discount rate is 8%. Given this information, what is the economic break-even point of sale?

Reference no: EM131318001

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