Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $70. The fixed costs incurred each year for factory upkeep and administrative expenses are $215,000. The machinery costs $2.3 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of number of diamonds sold? Break-even sales b. What is the NPV break-even level of sales assuming a tax rate of 40%, a 10-year project life, and a discount rate of 10%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $70. The fixed costs incurred each year for factory upkeep and administrative expenses are $215,000. The machinery costs $2.3 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of number of diamonds sold? Break-even sales b. What is the NPV break-even level of sales assuming a tax rate of 40%, a 10-year project life, and a discount rate of 10%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

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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A chip manufacturer makes video gaming chip that can be sold for $50. The chip material cost is $15 for each chip. The operations costs of the chip manufacturer (administration etc.) is $100000. The chip manufacturing machinery costs $500000 that is depreciated over 10 years to a salvage value of zero. a) What is the accounting breakeven level of sales in terms of number of chips sold? b) b. What is the NPV breakeven level of sales assuming a tax rate of 35%, 10-year project life and a discount rate of 12%.
Inc. uses fine-tuned equipment to produce electronic products. Each one of its machines costs $10,000,000 to purchase plus an additional $900,000 a year to operate. The machines have a 6-year (6) life after which they are worthless. What is the equivalent annual cost of one these machines if the required return is 11.4 percent?
am. 117.
Two costs for construction of a small, remote mine are for labor and transportation. Labor costs are expected to be $350,000 the first year, with inflation of 6% annually. Unit transportation costs are expected to inflate at 5% annually, but the volume of material being moved changes each year. In Time-0 dollars, the transportation costs are estimated to be $40,000, $60,000, $50,000, and $30,000 in Years 1 through 4. The inflation rate for the value of the dollar is 3%. If the firm uses an i′ of 7%, what is the equivalent annual cost in Time-0 dollars for this 4-year project?
Janko Wellspring Incorporated has a pump with a book value of $26,000 and a four-year remaining life. A new, more efficient pump is available at a cost of $47,000. Janko can receive $8,200 for trading in the old pump. The old machine has variable manufacturing costs of $27,000 per year. The new pump will reduce variable costs by $11,100 per year over its four-year life. Should the pump be replaced? Multiple Choice No, because the company will be $5,600 worse off in total. Yes, because income will increase by $5.500 per year No, because income wit decrease by $100 per year. Yes, because income will increase by $5.600 in total No, Janko will record a loss of $16,400 r they replace the pump
Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $70. The fixed costs incurred each year for factory upkeep and administrative expenses are $215,000. The machinery costs $2.3 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of number of diamonds sold? (Do not round intermediate calculations.) b. What is the NPV break-even level of diamonds sold per year assuming a tax rate of 21%, a 10-year project life, and a discount rate of 10%?
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Domestic
Find the selling price of an item which has a cost price of $15.61 and is sold at a loss of 371/2 % Ans $9.76 The government borrowed a certain amount of money to build a new bridge. It pays interest at a rate of 12%. If the yearly repayments are $320,000, calculate the amount borrowed. A potter finds he takes 5 hours to produce 8 vases. If he continues to work at the same rate , find: How long it will take him to make 20 vases How complete vases can be made in 24 hours Two brothers aged 15 and 10 years are given $3000 to be divided between them in the ratio of their ages. How much does each receive? If the cost of an article is $104 and its selling price is $120. Find the percentage profit.
The cost of a chemical plant was 5 million dollars produces a product at a rate of 20 millions kilograms per year and the selling price is 0.2 $/kg. If the cost of raw material per kg is 0.1$, the cost of utilities per kg is 0.01$ and labor cost per kg is 0.02 $. Assume that the profit after selling each kg and before taxes is 0.04$. Calculate a- the break-even point as a fraction or as a percentage of the total production capacity. b- Calculate the net profit if the taxes were 50%of the gross profit .
ABC Ltd. expects the cost of a machine to produce a specific part to be Rs. 40,00,000. After 5-year useful life, the machine is expected to have a salvage value of Rs.8,00,000. The annual maintenance costs are believed to be Rs. 14,00,000. How many parts must the company sell per year to break even at 12% annual interest rate, if the variable cost of producing the part is Rs. 150 per unit and if the part can be sold for Rs. 400 per unit? What will be the breakeven sales, if the selling price of the part is reduced to Rs. 300 per unit to counter act with the competitor?

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