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The Howard Sports Company is considering a new production line. The expected economic life of the project is 8 years. The project will generate sales and incur costs annually. Variable cost is 52% of sales. Total annual fixed costs, excluding depreciation, are $380,000. The initial outlay of the project is $1,264,000 and will be depreciated on a straight-line basis to zero at the end of the project (and the half-year rule does not apply). The company's tax rate is 30% and the discount rate is 9.10%. Calculate the NPV break-even level of sales. a. $3,843,229 b. $2,283,398 c. $1,473,875 d. $1,614,946 e. $1,332,803

The Howard Sports Company is considering a new production line. The expected economic life of the project is 8 years. The project will generate sales and incur costs annually. Variable cost is 52% of sales. Total annual fixed costs, excluding depreciation, are $380,000. The initial outlay of the project is $1,264,000 and will be depreciated on a straight-line basis to zero at the end of the project (and the half-year rule does not apply). The company's tax rate is 30% and the discount rate is 9.10%. Calculate the NPV break-even level of sales. a. $3,843,229 b. $2,283,398 c. $1,473,875 d. $1,614,946 e. $1,332,803

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Howard Sports Company is considering a new production line. The expected economic life of the project is 8 years. The project will generate sales and incur costs annually. Variable cost is 52% of sales. Total annual fixed costs, excluding depreciation, are $380,000. The initial outlay of the project is $1,264,000 and will be depreciated on a straight-line basis to zero at the end of the project (and the half-year rule does not apply). The company's tax rate is 30% and the discount rate is 9.10%. Calculate the NPV break-even level of sales.

a.

$3,843,229

b.

$2,283,398

c.

$1,473,875

d.

$1,614,946

e.

$1,332,803

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