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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?

c. What is the financial break-even point?

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jeff jeffy answered 1 year ago
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