Question
In: Finance
Financial Break Even Unit Price Unit Variable Cost Fixed Cost Operating Cash Flow Investment Lifeo f...
| Financial Break Even | Unit Price | Unit Variable Cost | Fixed Cost | Operating Cash Flow | Investment | Lifeo f Project | Discount Rate |
| h | 39 | 30 | 32,000 | g | 320,000 | 5 | 11% |
| j | 50 | 27 | 55,000 | i | 440,500 | 6 | 15% |
| l | 60 | 40 | 100,000 | k | 520,154 | 7 | 3% |
In each of the following case, find the unknown variables: be sure to show all work
Solutions
Expert Solution
Financial Break even is also known as EBIT. When EBIT = 0, that point is known as financial break even point.
Break even point in units = Fixed cost / (Selling price - Variable cost)
In the given question unit price is selling price.
Break even point in units (h) = 32000 / (39-30) = 3555.55 units, rounding off to nearest whole number = 3556 units.
Break even point in units (j) = 55000 / (50-27) = 2391. 30 units, rounding off to nearest whole number = 2391 units
Break even point in units (l) = 100000 / (60-40) = 5000 units.
Financial break even = Break even point in units * Selling price
Financial break even (h) = 3556 * 39 = Rs.138,684
Financial break even (j) = 2391 * 50 = Rs.119,550
Financial break even (l) = 5000 * 60 = Rs.300,000
Operating cash flow = EBIT + Depreciation - Taxes.
We assume that there is no tax liability.
Depreciation is calculated as per straight line method.
Depreciation = Investment / life of project
Depreciation (g) = 320000 / 5 = 64000
Depreciation (i) = 440500 / 6 = 73417
Depreciation (k) = 520154 / 7 = 74308
Operating cash flow (g) = 138684 + 64000 = $202,684
Operating cash flow (i) = 119550 + 73417 = $192,967
Operating cash flow (k) = 300000 + 74308 = $374,308
jeff jeffy answered 2 years agoRelated Solutions
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