Calculate accounting break-even point

Assignment Help Financial Management

Reference no: EM131980992

A 10-year widget-producing project requires $36 million in upfront investment (all in depreciable assets), 30% of which is borrowed capital at an interest rate of 6% per year. The expected widget sales are 1,000,000 widgets per year. The expected price per widget is $24 and the variable cost is $12 per widget. The fixed costs excluding depreciation are expected to be $6 million per year for ten years. The upfront investment will be depreciated on a straight line basis for the 10-year useful life of the project to zero book value. The expected salvage value of the assets is $8 million. The tax rate is 40% and the WACC applicable to the project is 15%.

Calculate the accounting Break-even point.

Reference no: EM131980992

Questions Cloud

Find the price per share of equity under given plans : Haskell Corp. is comparing two different capital structures. Plan I would result in 18,000 shares of stock and $95,000 in debt.

Estimate of the nominal interest rate on new bonds : what is the best estimate of the nominal interest rate on new bonds?

Initial investment in fixed assets when evaluating project : What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?

How much money can make via triangular arbitrage : A hedge fund manager has $5,000,000 to invest in the foreign currency market. The dollar-euro exchange rate is quoted as $1.1/€ and the dollar-pound exchange.

Calculate accounting break-even point : Calculate the accounting Break-even point. The tax rate is 40% and the WACC applicable to the project is 15%.

Interest on credit cards : Interest on Credit Cards. ?Eileen, who is currently paying ?$576 per year in finance charges to her credit card? company,

Which is the better way to pay-off the balance : Heather has a $6,500 balance on a credit card with a 14.5% APR. She wants to pay-off the balance, before buying her house, but she is only able to make a $250.

Disadvantages to deciding on sole proprietorship : Explain your rationale, to include advantages and/disadvantages to deciding on sole proprietorship, limited partnership, regular partnership, corporation.

Calculate the enterprise value of heavy metal : Estimate the enterprise value of Heavy Metal. If Heavy Metal has no excess cash, debt of $294 million, and 37 million shares outstanding.

User Account

All Pages