Financial Break-Even Ayden’s Toys, Inc., purchased a $435,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its 5-year economic life. Each toy sells for $16. The variable cost per toy is $5 and the firm incurs fixed costs of $295,000 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?
Financial Break-Even Ayden’s Toys, Inc., purchased a $435,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its 5-year economic life. Each toy sells for $16. The variable cost per toy is $5 and the firm incurs fixed costs of $295,000 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?
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 10PROB
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4. Financial Break-Even Ayden’s Toys, Inc., purchased a $435,000 machine to produce
toy cars. The machine will be fully
economic life. Each toy sells for $16. The variable cost per toy is $5 and the firm incurs
fixed costs of $295,000 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?
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