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1. A firm has estimated that the fixed costs of operations for a new product at $4.5M per year. Variable costs will depend on the volume of production, and has been quantified at $250 per unit. If the firm plans to sell the product for $1000. What volume of sales is needed for this product to break-even?

1. A firm has estimated that the fixed costs of operations for a new product at $4.5M per year. Variable costs will depend on the volume of production, and has been quantified at $250 per unit. If the firm plans to sell the product for $1000. What volume of sales is needed for this product to break-even?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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please answer question 1 with details on how to do it. Thank you. 

1. A firm has estimated that the fixed costs of operations for a new product at $4.5M per year. Variable costs will depend on the volume of production, and has been quantified at $250 per unit. If the firm plans to sell the product for $1000. What volume of sales is needed for this product to break-even? 2. A Machine costs $30,000 to purchase . Salvage value of the machine after 5 years = $7000. Calculate the machines capital recovery cost (EUAC) at 10%? 3. How much money must be invested in a retirement plan each month to accumulate $500,000 in 20 years? Assume an annual interest rate of 6% compounded monthly.
Transcribed Image Text:1. A firm has estimated that the fixed costs of operations for a new product at $4.5M per year. Variable costs will depend on the volume of production, and has been quantified at $250 per unit. If the firm plans to sell the product for $1000. What volume of sales is needed for this product to break-even? 2. A Machine costs $30,000 to purchase . Salvage value of the machine after 5 years = $7000. Calculate the machines capital recovery cost (EUAC) at 10%? 3. How much money must be invested in a retirement plan each month to accumulate $500,000 in 20 years? Assume an annual interest rate of 6% compounded monthly.
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