Question
In: Finance
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 8 percent. What is the financial break-even point? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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...
Shoe Supply has decided to produce a new line of shoes that will have a selling...
Shoe Supply has decided to produce a new line of shoes that will
have a selling price of $68 and a variable cost of $27 per pair.
The company spent $187,000 for a marketing study that determined
the company should sell 85,000 pairs of the new shoes each year for
three years. The marketing study also determined that the company
will lose sales of 24,000 pairs of its high-priced shoes that sell
for $129 and have variable costs of $63...
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...
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?...
Rooney, Inc. is considering a new machine for its largest product line. The cash flows are:...
Rooney, Inc. is considering a new machine for its largest
product line. The cash flows are:
Installed Purchase Price $ 40,000
Reduced Cost of Materials $ 6,000 per year
Labor Savings $ 9,000 per year
Increase in Working Capital (for Year 0 and 1 only) $5,000
Depreciable Life (zero salvage value) 4 years
Economic Life 8 years
Required Return 12%
Tax Rate 40%
1. What is the NPV of this machine if it does not replace any
other?
2. Suppose...
Adding Value in Nike’s Production Line,” research your favorite brand of shoes (Nike, Adidas, New Balance,...
Adding Value in Nike’s Production Line,” research your
favorite brand of shoes (Nike, Adidas, New Balance, etc) and answer
the following questions: Has the company experienced declining or
increased cost attributed to computerization? Was variable cost
increased or decreased? Were fixed cost increased or decreased.
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...
October 1, 2019 Lynbrook Inc. purchased a new machine for one of its stores. The machine's...
October 1, 2019 Lynbrook Inc. purchased a new machine for one of
its stores. The machine's estimated useful life at the time of the
purchase was 20 years, and its residual value was $5,000.
Purchase price of machine $175,000 Freight costs 7,000 Installation
of machine 17,000 Sales taxes 6,000 Cost to repair machine damaged
during installation 1,000
Instructions: A. Compute depreciation expense for the years 2019
through 2021 under each depreciation method listed below: 1.
Straight-line, with fractional years...
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