Don't give answer in image formatNeed only break even part Current Attempt in ProgressJason is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his firstyear of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,172, Motor oil $2 per quart. He estimates that eachoil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of$1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oilchanges as follows:Quantity of Oil Changes6,3008,30011,30014,300Fixed cost18,600Jason anticipates that he can provide the oil change service with a filter at $42.86 eachVariable cost $Using the high-low method, determine variable costs per unit and total fixed costs. (Round variable cost to 2 decimal places,e.g. 52.75.)Utility Costs$$15,184$18,800$21,100$24,100$26,500eTextbook and Media0.92 per unit9368 Determine the break-even sales quantity of oil changes and sales dollars. (Round Contribution margin ratio to 2 decimalplaces, e.g. 57.20%. Round final answers to 0 decimal places, e.g. 5720)Break-even oil changes in unitsBreak-even sales in dollarseTextbook and Media

The high-low method is a simplest method to estimate cost behaviour. Under this method,we…

Answered: Jason is considering opening a Fast 'n…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 8P

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Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
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Talbot Industries is considering launching a new product. The new manufacturing equipment will cost 17 million, and production and sales will require an initial 5 million investment in net operating working capital. The companys tax rate is 40%. a. What is the initial investment outlay? b. The company spent and expensed 150,000 on research related to the new product last year. Would this change your answer? Explain. c. Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for 1.5 million after taxes and real estate commissions. How would this affect your answer?
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Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?
Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
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