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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?

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jeff jeffy answered 2 years ago
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