You are considering starting a new factory producing small electric heaters. Each unit will sell at a price of $17. The production cost of each heater is $12. The fixed cost of production is $18000. This project has an economic life of 8 years. The project requires an investment of $185000 in plants and equipment. This equipment will be depreciated using a straight-line depreciation method to a salvage value of zero. The required rate of return for the project is 11 percent. The marginal corporate tax rate is 21 percent. Based on these assumptions, calculate the number of units of production at the net present value (financial) break-even point. O 11371.58 O 11485 O 11471.68 O 11215.37
You are considering starting a new factory producing small electric heaters. Each unit will sell at a price of $17. The production cost of each heater is $12. The fixed cost of production is $18000. This project has an economic life of 8 years. The project requires an investment of $185000 in plants and equipment. This equipment will be depreciated using a straight-line depreciation method to a salvage value of zero. The required rate of return for the project is 11 percent. The marginal corporate tax rate is 21 percent. Based on these assumptions, calculate the number of units of production at the net present value (financial) break-even point. O 11371.58 O 11485 O 11471.68 O 11215.37
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk
Section: Chapter Questions
Problem 6P: New-Project Analysis
The Campbell Company is considering adding a robotic paint sprayer to its...
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