Question

In: Finance

Luke Athletics Inc has purchased a $200,000 machine to produce tennis balls. The machine will be...

Luke Athletics Inc has purchased a $200,000 machine to produce tennis balls. The machine will be fully depreciated by the straight-line method for its economic life of five years and will be worthless after its life. The firm expects that the sales price of the toy is $25 while its variable cost is $5. The firm should also pay $350,000 as fixed costs each year. The corporate tax rate for the company is 25 percent, and the appropriate discount rate is 12 percent.

What is the break-even point using the finance approach?

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A machine is programmed to produce tennis balls so that the mean bounce is 36cm when...
A machine is programmed to produce tennis balls so that the mean bounce is 36cm when the ball is dropped from a platform. An experiment is conducted using 35 tennis balls. The 5% level of significance is to be used to test the hypothesis. The sample mean was computed to be 35.5 cm and the standard deviation of the sample is 0.9 cm. Is there evidence that the sample mean is less than 36 cm?
Jed's Cars, Inc., just purchased a $450,000 machine to produce toy cars. The machine will be...
Jed's Cars, 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 23 percent. The appropriate discount rate is 11 percent. What is the financial break-even point for the project? (Do not round intermediate calculations...
Ayden's Toys, Inc., just purchased a $474,000 machine to produce toy cars. The machine will be...
Ayden's Toys, Inc., just purchased a $474,000 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 $281,000 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?
ABC Toys, Inc just purchased a $375,000 machine to produce toy cars. The machine will be...
ABC Toys, Inc just purchased a $375,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $21. The variable cost per toy is $8, and the firm incurs fixed costs of $280,000 each year. The corporate tax rate for the company is 20%. The appropriate discount rate is 8%. a. What is the accounting break-even point? b. What is the cash flow (OCF) break-even point?...
(a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of...
(a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of 25% per annum using the straight-line method. In order to raise the reported profit, the company’s accountant decided to change the depreciation rate to 10% per annum. (b) Talent Limited is a recruitment agency. On 10 December 2018, Talent Limited helped Ocean Limited hire its Senior Manager and charged the company an agency fee of $30,000. The agency fee was received on 15 January...
On Jan 1, 2021, KFC, Inc. Purchased machine for $200,000. If had a estimated value of...
On Jan 1, 2021, KFC, Inc. Purchased machine for $200,000. If had a estimated value of $40,000 and a 4 year useful life. KFC has Dec 31, year and uses the double declining balance method of depreciation. what is the the accumulated depreciation on Dec 31, 2022?
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes....
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 6 years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $642,000. The sales price per pair of shoes is $95, while the variable cost is $43. Fixed costs of $335,000 per year are attributed to the machine. The corporate tax rate is 25 percent and the appropriate discount rate is...
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes....
James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 6 years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $636,000. The sales price per pair of shoes is $94, while the variable cost is $42. Fixed costs of $330,000 per year are attributed to the machine. The corporate tax rate is 24 percent and the appropriate discount rate is...
In SAS code please. Tennis balls are tested in a machine to show how many bounces...
In SAS code please. Tennis balls are tested in a machine to show how many bounces they can withstand before they fail to bounce 30% of their dropping height. Two brands of balls (W and P) are compared. In addition, the effect of shelf life on these brands is tested. Half of the balls of each brand are 6 months old, the other half, fresh. Using a two-way analysis of variance, what conclusions can you reach? The data are shown...
Jed's Cars, Inc., just purchased a $450,000 machine to produce toy cars.
Jed's Cars, 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 23 percent. The appropriate discount rate is 11 percent. What is the financial break-even point for the project?(Do not round intermediate calculations and...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT