What is the financial break-even point for the project

Assignment Help Financial Management
Reference no: EM131027166

L.J.’s Toys Inc. just purchased a $450,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its six-year economic life. Each toy sells for $27. The variable cost per toy is $12, and the firm incurs fixed costs of $277,000 each year. The corporate tax rate for the company is 35 percent. The appropriate discount rate is 11 percent. What is the financial break-even point for the project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Reference no: EM131027166

Questions Cloud

Present value of payoff-when product is brought to market : Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $34.3 million. If the DVDR fails, the present value of the payoff is $12.3 million. Calculate the N..
Straight-line depreciation to zero over the four-year life : Consider a four-year project with the following information: Initial fixed asset investment = $460,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $18; fixed costs = $150,000; quantit..
Establishment of local collection centers around the country : Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by three ..
Diagram showing cash flows from your perspective as lender : Consider the following problem. You lend your friend $10 today, which s/he promises to repay you in two instalments of $5.25 each. The first instalment is to be paid in two weeks from today; and the second—in four weeks from today. Sketch a diagram s..
What is the financial break-even point for the project : L.J.’s Toys Inc. just purchased a $450,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its six-year economic life. Each toy sells for $27. The variable cost per toy is $12, and the firm incurs f..
Use straight-line depreciation to zero over projects life : You are evaluating two different silicon wafer milling machines. The Techron I costs $216,000, has a three-year life, and has pretax operating costs of $55,000 per year. The Techron II costs $380,000, has a five-year life, and has pretax operating co..
Compared with other debt instruments and common stocks : Indicate why you agree or disagree with the following statement: “Investing in the junk bond market offers the opportunity to realize superior investment returns compared with other debt instruments and common stocks.”
Performing the analysis from the perspective of an investor : Imagine that you have $100,000 to invest. You are going to invest it all in one investment for the next 5 years at which point you will revaluate both your investment and personal situations. You will be performing the analysis from the perspective o..
Interest rates have increased since bond k was issued : Multiple Choice: Bond K is selling at par with a 5% coupon. Bond L is selling for $1,030. Bond M is selling for $960 and has a YTM of 5.5%. Bonds K, L, and M are of similar quality and all mature in 6 years. Bonds K and L are noncallable, but Bond M ..

Reviews

Write a Review

Financial Management Questions & Answers

  Waste management-the expense recognition principle

Consult Paragraphs 5-6 of PCAOB Auditing Standard No. 15. As an auditor, what type of evidence would you want to examine to determine whether Waste Management's decision to change the useful life and salvage value of its assets was appropriate under ..

  What is the projected increase in retained earnings

The Cookie Shoppe expects sales of $750,000 next year. The after-tax profit margin is 6% percent and the firm has a 25% dividend payout ratio. What is the projected increase in retained earnings?

  Important concept in the capital budgeting process

What is opportunity cost and why is it an important concept in the capital budgeting process? The opportunity cost concept applies to almost every financial decision we make as individuals. Can you give an example from your own experience? What is th..

  How many contracts on treasury bonds futures

A mortgage banker had made loan commitments for $20 million in three months. How many contracts on Treasury bonds futures must the banker write or buy?

  What is the risk-adjusted npv for each project

The project will use the straight-line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million per year before tax and has additional annual costs of $600,000.  The ..

  How much would you still owe at the end of the first year

Suppose you borrowed $15,000 at a rate of 8.5% and must repay it in 5 equal instalments at the end of each of the next 5 years. How much would you still owe at the end of the first year, after you have made the first payment?

  Short-term bond prices are more sensitive to interest rate

Short term interest rates are more volatile than long-term interest rates, so short-term bond prices are more sensitive to interest rate changes than are long-term bond prices. Is this statement true or false? Explain.

  Should the investor acquire the stock

Company XYZ's preferred stock is selling for $26 in the market and pays a $2.60 annual divident. If the market's required yield is 11%, what is the value of the stock for that investor? Should the investor acquire the stock?

  Both partnerships and corporations incur double taxation

Both partnerships and corporations incur double taxation. Both sole proprietorships and partnerships are taxed in a similar fashion. Partnerships are the most complicated type of business to form. Both partnerships and corporations have limited liabi..

  What is thales japans net translation exposure

What is the translation amount to be shown on American Golfs equity account for the year if the peso is the functional currency? How would your answer change if the dollar were the functional currency?

  The market capitalization rate

MF Corp. has an ROE of 12% and a plowback ratio of 50%. If the coming year's earnings are expected to be $4 per share, at what price will the stock sell? The market capitalization rate is 14%. What price do you expect MF shares to sell for in three y..

  Issued some new preferred stock

ABC Corp. just issued some new preferred stock. The issue will pay a $3 quarterly dividend in perpetuity, beginning 12 years from now. If the market requires a 8% return on this investment, how much does a share of preferred stock cost today?

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