Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2.900 per year, and variable costs are $30 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 14%. (For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.) a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%?

Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2.900 per year, and variable costs are $30 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 14%. (For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.) a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%?

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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3. Schultz Company is considering purchasing a machine that would cost $478,800 and have a useful life of 5 years. The machine would reduce cash operating costs by $114,000 per year. The machine would have a salvage value of $6,200. Schultz Company prefers a payback period of 3.5 years or less.Required: a. Compute the payback period for the machine. What does this mean? b. Compute the return on average investment (ROI)
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Modern Artifacts can produce keepsakes that will be sold for $90 each. Nondepreciation fixed costs are $1,100 per year, and variable costs are $65 per unit. The initial investment of $4,300 will be depreciated straight-line over its useful life of five years to a final value of zero, and the discount rate is 10%. a. What is the degree of operating leverage of Modern Artifacts when sales are $7,740? Note: Round your answer to 1 decimal place. b. What is the degree of operating leverage when sales are $13,500? Note: Round your answer to 1 decimal place. a. Degree of operating leverage b. Degree of operating leverage times times
Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2,500 per year, and variable costs are $30 per unit. The initial investment of $2,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%. Note: For all the requirements, do not round intermediate calculations. Round your answer up to the nearest whole unit. a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%? a. Acounting break-even level of sales b. NPV break-even level of sales c. Acounting break-even level of sales d. NPV break-even level of sales units units units units
Coronado, Inc. is considering purchasing equipment costing $39000 with a 7-year useful life. The equipment will provide cost savings of $8700 and will be depreciated straight-line over its useful life with no salvage value. Coronado Inc. requires a 9% rate of return. What is the approximate internal rate of return for this investment? Period 7 10% O 11% 000 9% 8% 7% 5.389 8% Present Value of an Annuity of 1 5.206 9% 5.033 10% 4.868 11% 4.712 14% 4.288
The management of Kunkel Company is considering the purchase of a $34,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Use Excel or a financial calculator to solve. Required: 1. Determine the net present value of the investment in the machine. (Any cash outflows should be indicated by a minus sign. Round answers to the nearest dollar.) Net present value 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (Any cash outflows should be indicated by a minus sign.) Total Cash Item Cash Flow Years Flows Annual cost savings Initial investment 1 Net cash flow %24 24
a
Assume XYZ wishes to purchase a machine for $500k that will produce widgets which will sell for $50 each. Assume variable costs of $30/unit and other fixed costs will be $100k per year. Assume a tax rate of 25%, and assume that assets purchased will be in a CCA class with a rate of 20%. Assume further the assets purchased will have a salvage value of $20,000 after the 5 year life of the project, and that interest rates are 10%. a. Compute the after-tax contribution margin. b. Find the PV break-even volume.
The management of Kunkel Company is considering the purchase of a $29,000 machine that would reduce operating costs by $6,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 16%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the net present value of the investment in the machine. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Use the appropriate table to determine the discount factor(s).) Net present value
please help me, thank you
Modern Artifacts can produce keepsakes that will be sold for $270 each. Nondepreciation fixed costs are $3,200 per year, and variable costs are $190 per unit. The initial investment of $9,600 will be depreciated straight-line over its useful life of 8 years to a final value of zero, and the discount rate is 16%. a.What is the degree of operating leverage of Modern Artifacts when sales are $16,740? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the degree of operating leverage when sales are $28,890? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Why is operating leverage different at these two levels of sales? Degree of operating leverage is _____ when profits are _____.
please answer with full work explanation calculation etc. please answer correctly KB. Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years. Cash inflows are expected to increase by $40,000 a year. The company's minimum rate of return is 10 percent.The net present value of the project is

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