Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140. The material cost of astandard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $216,000. Themachinery costs $2.5 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 the number of diamonds sold?Note: Do not round intermediate calculations.b. What is the NPV break-even level of sales assuming a tax rate of 21%, a 10-year project life, and a discount rate of 12%?Note: Do not round intermediate calculations. Round your answer up to the nearest whole unit.Answer is complete but not entirely correct.diamonds peryeardiamonds peryeara: Break-even salesb. Break-even sales4,6607,621 X

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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 company is planning to purchase a machine that will cost $39,552, have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? $ 144,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income Multiple Choice 6.18 years. 12 36 veare $ 86,400 4,000 48,000 (138,400) $ 5,600
2 Break-even. Value-Chains makes keychains out of gold. Each keychain can be sold for $100. The materials cost is $40. The Öxed costs incurred each year for factory and administrative expenses are $200,000. The machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero. 1. What is the accounting break-even level of annual sales in terms of number of keychains sold? 2. What is the NPV break-even level of sales assuming a tax rate of 35%, a 10-year project life, and a discount rate of 12%? 3. Elaborate on your observations and decisions. (Variable cost per unit remains unchanged)
6. A factory engaged in the fabrication of an automobile part with production capacity of 700,000 units per year is only operating at 62% of capacity due to unavailability of the necessary foreign currency to finance the importation of the raw materials. The annual income is P430,000. Annual fixed cost is P190,000 and variable cost is PO.348 per unit. What is the current profit or loss?
Junker Rental Car has a contract with a garage for major repair service for $450 per car, every 6 months. Management estimates that for $350,000, the company could have its own facility, financed at 8% interest for 20 years, and a salvage value of $20,000. They will do their own car repairs at a cost of $200 per car, every 6 months. Ignoring taxes and other economic factors, what is the minimum number of cars needed to make the change feasible?
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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.
A company is planning to purchase a machine that will cost $34,800, will have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income Multiple Choice O O O 3 5.80% 5.17% 50.00% 17.24%. 33.33%. E $ 105,000 $ 51,200 5,800 45,000 (102,000) $ 3,000 80 F3 a F4 F5 F6 54 85 R D F ןד C V 6 & 7 T Y DII F7 F8 F9 F10 U 8 9 0 0 G H J K L B N M P
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?
Alpha company invested $10,000,000 in manufacturing equipment for producing small wastebaskets. If the company uses an interest rate of 15% per year, the amount of money it will have to earn each year to recover its investment in 7 years is closest to: Select one: a. $6,403,600 b. $4,403,600 c. $2,403,600 d. $9,403,600

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