Question

In: Finance

1) Approximately how much was paid to invest in a project that has an npv break-even...

1) Approximately how much was paid to invest in a project that has an npv break-even level of sales of 5 million, cash flows determined by: 0.12*sales - 375000, an 8 year life and a 10% discount rate?

Solutions

Expert Solution

Annual cash flow = (.12* 5000000) - 375000

                  = 600000 - 375000

                  = 225000

Present value of annual cash flow =PVA10%,8 * Annual cash flow

                               = 5.33493 * 225000

                                 = 1,200,359.25

At breakeven ,Initial cost is equals to present value of annual cash flow = 1200359.25.

**

Find present value annuity factor from table at 10% for 8 years or using financial calculator where i=10%,n=8 and PMT =1

jeff jeffy answered 4 days ago
Next > < Previous

Related Solutions

Calculate the accounting break-even, the cash break-even and the financial break-even       points for this project....
Calculate the accounting break-even, the cash break-even and the financial break-even       points for this project. The company’s required return is 9% and the project will run       for 5 years. Round your answer up to the next highest integer. Ignore any tax effects       in calculating the cash break-even.                                     Unit Variable              Annual Fixed              Equipment Unit Price                           Cost                            Costs                          Cost $ 3,020                             $ 2,275                   $ 9,000,000                 $ 3,100.000
What is break-even? How is break-even calculated? How is a break-even analysis used? What are the...
What is break-even? How is break-even calculated? How is a break-even analysis used? What are the risks if break-even is not analyzed carefully?
Consider a project with the following data: accounting break-even quantity = 24,240 units; cash break-even quantity...
Consider a project with the following data: accounting break-even quantity = 24,240 units; cash break-even quantity = 16,000 units; life = three years; fixed costs = $160,000; variable costs = $60 per unit; required return = 15 percent. Ignoring the effect of taxes, find the financial break-even quantity.
Consider a project with the following data: accounting break-even quantity = 11,175 units; cash break-even quantity...
Consider a project with the following data: accounting break-even quantity = 11,175 units; cash break-even quantity = 10,000 units; life = four years; fixed costs = $160,000; variable costs = $24 per unit; required return = 8 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)   Break-even quantity    * Please post formula used*
how does the break-even point fit into this discussion? What is the break-even point? Why is...
how does the break-even point fit into this discussion? What is the break-even point? Why is it an important concept in managerial accounting? What are its uses?
a. How are contribution margin and break even related? b. What happens to break even point...
a. How are contribution margin and break even related? b. What happens to break even point if variable cost per unit changes, if fixed cost changes? c. Explain the degree of operating leverage and how it is related to a companies profit risk.
Problem 9-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $520,000, has...
Problem 9-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $520,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 64,000 units per year. Price per unit is $46, variable cost per unit is $26, and fixed costs are $832,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project....
A. Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $780,000, has an...
A. Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $780,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 92,000 units per year. Price per unit is $37, variable cost per unit is $23, and fixed costs are $875,000 per year. The tax rate is 35 percent, and we require a return of 15 percent on this project. B....
Find the break even point ? Rent is $10,000. Salaries to be paid is $50,000. Misc....
Find the break even point ? Rent is $10,000. Salaries to be paid is $50,000. Misc. Fixed costs are $40,000. Raw Materials are $4 per unit. Packaging is $.10 cents per unit. Direct Labor is $3.40 per unit. Sales price is $10.00 per unit. If annual capacity was 30,000 units, how much would the sales price need to be to break even?
Find the break even point ? Rent is $10,000. Salaries to be paid is $50,000. Misc....
Find the break even point ? Rent is $10,000. Salaries to be paid is $50,000. Misc. Fixed costs are $40,000. Raw Materials are $4 per unit. Packaging is $.10 cents per unit. Direct Labor is $3.40 per unit. Sales price is $10.00 per unit. If annual capacity was 30,000 units, how much would the sales price need to be to break even?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT