Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $43,000 per boat. The variable costs will be about half that, or $22,000 per boat, and fixed costs will be $485,000 per year. The total investment needed to undertake the project is $3,300,000. This amount will be depreciated straight-line to zero over the 7-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a required return of 13 percent on new projects. FC+ OCF-TCXD 1-TC Q= P-v Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 23 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash break-even Accounting break-even Financial break-even

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Wettway Sailboat Corporation is considering whether to
launch its new Margo-class sailboat. The selling price will
be $43,000 per boat. The variable costs will be about half
that, or $22,000 per boat, and fixed costs will be $485,000
per year.
The total investment needed to undertake the project is
$3,300,000. This amount will be depreciated straight-line
to zero over the 7-year life of the equipment. The salvage
value is zero,
zero, and there are no working capital
consequences. Wettway has a required return of 13
percent on new projects.
FC+
OCF-TCXD
1-TC
Q=₁ P-v
Use the above expression to find the cash, accounting,
and financial break-even points for Wettway Sailboat.
Assume a tax rate of 23 percent. (Do not round
intermediate calculations and round your answers to 2
decimal places, e.g., 32.16.)
Cash break-even
Accounting break-even
Financial break-even
Transcribed Image Text:Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $43,000 per boat. The variable costs will be about half that, or $22,000 per boat, and fixed costs will be $485,000 per year. The total investment needed to undertake the project is $3,300,000. This amount will be depreciated straight-line to zero over the 7-year life of the equipment. The salvage value is zero, zero, and there are no working capital consequences. Wettway has a required return of 13 percent on new projects. FC+ OCF-TCXD 1-TC Q=₁ P-v Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 23 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash break-even Accounting break-even Financial break-even
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