Ayden's Toys, Incorporated, just purchased a $480,000 machine to produce toy carThe machine will be fully depreciated by the straight-line method over its 7-yeaeconomic life. Each toy sells for $20. The variable cost per toy is $7 and the firm incurfixed costs of $340,000 per year. The corporate tax rate for the company is 24 percenThe appropriate discount rate is 12 percent. What is the financial break-even point fcthe project? (Do not round intermediate calculations and round your answer todecimal places, e.g., 32.16.)Financial break-even pointunits

Variables in the question: Description DataInitial cost ($)480000Years7Discount…

Answered: Ayden's Toys, Incorporated, just…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 9P

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Ayden’s Toys, Inc., just purchased a $475,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its 6-year economic life. Each toy sells for $19. The variable cost per toy is $6 and the firm incurs fixed costs of $335,000 per 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?
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