Ayden's Toys, Incorporated, purchased a $485,000 machine to produce toy cars. The Machine Will be fully depreciated by the Straight-line method over its five-year economic life. Each tay sells for $19. The variable cost per toy is $6 and the firm incurs fixed Cost of $310,000 per year. The Corporate tax rate for the company is 24 percent. The appropiate discount rate is 12 percent. What is the financial break-even point for the project? Financial Break-Even point = Fixed cost + Depreciation Depreciation: Initial Investment Useful life स. Sales Price-Variable costs 485.000 5 310,000 + 97,000 - 407000 91,000 19-6 13 12 12(1+12) 5 000,068 861 000,068 es 000 rec P PC 008 HO
Ayden's Toys, Incorporated, purchased a $485,000 machine to produce toy cars. The Machine Will be fully depreciated by the Straight-line method over its five-year economic life. Each tay sells for $19. The variable cost per toy is $6 and the firm incurs fixed Cost of $310,000 per year. The Corporate tax rate for the company is 24 percent. The appropiate discount rate is 12 percent. What is the financial break-even point for the project? Financial Break-Even point = Fixed cost + Depreciation Depreciation: Initial Investment Useful life स. Sales Price-Variable costs 485.000 5 310,000 + 97,000 - 407000 91,000 19-6 13 12 12(1+12) 5 000,068 861 000,068 es 000 rec P PC 008 HO
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
Problem 1PS
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Question
Ayden’s Toys, Incorporated, purchased a $485,000 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 $19. The variable cost per toy is $6 and the firm incurs fixed costs of $310,000 per year. The corporate tax rate for the company is 24 percent. The appropriate discount rate is 12 percent. What is the financial break-even point for the project?
Transcribed Image Text:Ayden's Toys, Incorporated, purchased a $485,000 machine
to produce toy cars. The Machine Will be fully depreciated
by the Straight-line method over its five-year economic
life. Each tay sells for $19. The variable cost per toy is $6
and the firm incurs fixed Cost of $310,000 per year. The
Corporate tax rate for the company is 24 percent. The
appropiate discount rate is 12 percent. What is the financial
break-even point for the project?
Financial Break-Even point = Fixed cost + Depreciation
Depreciation:
Initial Investment
Useful life
स.
Sales Price-Variable costs
485.000
5
310,000 + 97,000 - 407000
91,000
19-6
13
12 12(1+12)
5
000,068
861
000,068
es 000 rec
P
PC
008 HO
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