You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information: Sales price per abalone Variable costs per abalone Fixed costs per year Depreciation per year Tax rate = $34.90 = $6.00 = $374,000 = $119,000 = 21% The discount rate for the company is 13 percent, the initial investment in equipment is $714,000, and the project's economic life is six years. Assume the equipment is depreciated on a straight-line basis over the project's life. a. What is the accounting break-even level for the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the financial break-even level for the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Accounting break-even b. Financial break-even units units

You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information: Sales price per abalone Variable costs per abalone Fixed costs per year Depreciation per year Tax rate = $34.90 = $6.00 = $374,000 = $119,000 = 21% The discount rate for the company is 13 percent, the initial investment in equipment is $714,000, and the project's economic life is six years. Assume the equipment is depreciated on a straight-line basis over the project's life. a. What is the accounting break-even level for the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the financial break-even level for the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Accounting break-even b. Financial break-even units units

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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