Find how many parts need to be made each month to break even

Assignment Help Financial Management
Reference no: EM131065584

The cost of machinery for a project is $400,000. Expected life of the equipment is 4 years with 10% salvage. Direct labor rate is $30/hr. Production rate is 15parts/hr. Direct Material Cost is $12.37/unit. Parts sell for $22/each. Straight line depreciation with a tax rate of 36%. The company wants to earn an annual nominal rate of 12%(1% per month), compounding monthly. Use an AEC equation to find how many parts need to be made each month to break even. Please show a step by step solution

Reference no: EM131065584

Questions Cloud

What is the effective annual return on lending business : Friendly’s Quick Loans, Inc., offers you “$4.70 for $5.70 or I knock on your door.” This means you get $4.70 today and repay $5.70 when you get your paycheck in one week (or else). If you were brave enough to ask, what APR would Friendly’s say you we..
The firm use to discount the projects cash flows : Titan Mining Corporation has 8.3 million shares of common stock outstanding and 270,000 5 percent semiannual bonds outstanding, par value $1,000 each. If the company is evaluating a new investment project that has the same risk as the firm's typical ..
What is the combined value of debt in two existing companies : Sunburn Sunscreen has a zero coupon bond issue outstanding with a $25,000 face value that matures in one year. The current market value of the firm's assets is $27,200. The standard deviation of the return on the firm's assts is 35% per year, and the..
Dividend growth rate-what will share of stock sell for today : Storico Co. just paid a dividend of $1.90 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent divid..
Find how many parts need to be made each month to break even : The cost of machinery for a project is $400,000. Expected life of the equipment is 4 years with 10% salvage. Direct labor rate is $30/hr. Production rate is 15parts/hr. Direct Material Cost is $12.37/unit. Use an AEC equation to find how many parts n..
Do you think the Twitter IPO was successful : Do you think the Twitter IPO was successful? For the company? For investors? Alibaba's recent IPO in the US was somewhat unusual. What do you think about this IPO? Would you buy shares? Why or why not?
Assume there are no taxes or imperfections : Assume there are no taxes or imperfections. Given this assumption, which one of the following statements is correct? A cash dividend has no effect on the market price of the payer's stock. A cash dividend decreases shareholder wealth. Stock repurchas..
The issuance of municipal securities is regulated by : The issuance of municipal securities is regulated by:
What will be the firms operating cycle : Suppose that Dunn Industries has annual sales of $2.5 million, cost of goods sold of $1,850,000, average inventories of $1,900,000, and average accounts receivable of $660,000. Assuming that all of Dunn's sales are on credit, what will be the firm's ..

Reviews

Write a Review

Financial Management Questions & Answers

  Compensation expense-stock options to certain executives

On January 1, 2014, Moonshine Company granted 90,000 stock options to certain executives. What amount should Moonshine recognize as compensation expense for 2014? If unexpected turnover in 2015 caused the company to estimate that 10% of the options w..

  Finance iridium with project debt instead of corporate debt

Is anyone familiar with the "Iridium"/(Motorola) case study? Why did Motorola finance Iridium with project debt instead of corporate debt?

  Describes the portion of an asset''s total expected return

The possibility that an actual outcome will be better or worse than its expected outcome. The general term that describes the portion of an asset's total expected return that is greater than the return earned on the market risk-free rate. The result ..

  Determine the present value of the lease percent

1. Air Atlantic has been offered a 3 year-old jet airlines under a 12-year arrangement. The lease requires AA to make annual lease payments of $500,000 beginning of each of the next 12 years. Determine the present value of the lease percent.

  Debt is stock variable while deficit is flow variable

Which of the following is a conclusion of using the generational accounting measure? Both debt and deficit are flow variables. Debt is a stock variable while deficit is a flow variable. Debt is a flow variable while deficit is a stock variable. Debt ..

  Stock price move in either direction before you lose money

The common stock of the C.A.L.L Corporation has been trading in a narrow range around $50 per share for the past month, and you believe it is going to stay in that range for the next three month. What is the most money you can make on this option? Ho..

  Find the present value of such stream of cash payments

A U.S. treasury bond (selling at a par value of $1,000) that matures at the end of 5 years is said to have a coupon rate of 6% if, after paying $1,000, the purchaser receives $30 at the end of each of the following 9 6-month periods and then receives..

  Call option is currently selling

A call option is currently selling for $6.40. It has a strike price of $55 and six months to maturity. A put option with the same strike price sells for $7.40. The risk-free rate is 5.3 percent, and the stock will pay a dividend of $2.70 in three mon..

  What is the companys net income

Recreational Supplies Co. has net sales of $12,660,000, an ROE of 23.00 percent, and a total asset turnover of 2.52 times. If the firm has a debt-to-equity ratio of 0.76, what is the company’s net income?

  Find the required return for new preferred stockholders

Austen Enterprises has the following capital structure based on market values which is considered to be optimal: For the coming year, management expects to realize $1,000,000 in net income that can either be paid out as dividends or retained. The mar..

  What is the firms cost of equity capital

Guy's Mills announced this morning that its next annual dividend will be decreased to $1.60 a share and that all future dividends will be decreased by an additional 2 percent annually. The stock price after the announcement was $21.20 a share. What i..

  Operating cash inflows generated by the replacement

A new machine with an installed cost of $85,000. Sale of the old machine will yield $30,000 after taxes. Operating cash inflows generated by the replacement will exceed the operating cash inflows of the old machine by $20,000 in each year of a 6-year..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd