Suppose a company has an investment that costs $3,500 and requires a 20 percentreturn. The project has a 5 year life. Selling price is $40, variable cost is $20, and FCis $500. How many of their products do they need to sell to break even financially?

To calculate the break-even point in units, you can use the following formula:

Answered: How many of their products do they need…

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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Explains it correctly. Not copy paste
Since break-even analysis focuses on making zero profit, it is of no value in determining the units a firm must sell to earn a targeted profit. Do you agree or disagree with this statement? why?
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