BARUCH FUND OF CORPORATE FIN. W/CONNECT
10th Edition
ISBN: 9781264531820
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 10, Problem 10QP
Summary Introduction
To find: The variable cost per unit.
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Students have asked these similar questions
The following estimates have been prepared for a project:
Fixed costs: $12,600
Depreciation: $8,400
Sales price per unit: $4
Accounting break-even: 20,000 units
What must be the variable cost per unit? (Round your answer to 2 decimal places.)
Variable cost
per unit
The following estimates have been prepared for a project:
Fixed costs: $5,400
Depreciation: $3,600
Sales price per unit: $3
Accounting break-even: 50,000 units
What must be the variable costper unit?
The following estimates have been prepared for a project:
Fixed costs: $36,000Depreciation: $24,000Sales price per unit: $4Accounting break-even: 40,000 units
What must be the variable cost per unit? (Round your answer to 2 decimal places.)
Chapter 10 Solutions
BARUCH FUND OF CORPORATE FIN. W/CONNECT
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- The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: 50 24 30 $370,000 36,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.4 million, which will be depreclated straight-line over the project life to a final value of zero. The firm's tax rate is 21% and the required rate of return is 14%. (For all the requirements, a negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.) a. What is project NPV in the best-case scenario, that is, assuming all variables take on the best possible value? b. What is project NPV in the worst-case scenario?arrow_forwardThe most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 50 $ 30 $ 490,000 48,000 units per year However, you recognize that some of these estimates are subject to error. Suppose each variable turns out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $2.3 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 21%, and the required rate of return is 10%. a. NPV b. NPV a. What is project's NPV in the best-case scenario, that is, assuming all variables take on the best possible value? b. What is project's NPV in the worst-case scenario? Note: For all the requirements, a negative amount should be indicated by a minus sign. Enter your answers in dollars, not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount. 4arrow_forwardThe most likely outcomes for a particular project are estimated as follows: Unit price Variable cost $ 49 21 $309, 000 29, 200 uni ts per year Fixed cost Expected sales However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 13 years and requires an initial investment of $0.99 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35% and the required rate of return is 17%. What is project NPV in the "best case" scenario, that is, assuming all variables take on the best possible value? (Round your answer to the nearest whole dollar amount.) NPV in the "best case" scenario 1961296 What about the "worst case" scenario? (Use the minus sign for negative values. Round your answer to the nearest whole dollar amount.) NPV in the "worst case" scenario -148345arrow_forward
- Analysis of a project: In determining the annual profit of a project the following information is used: Variable costs are S /. 10 per unit, fixed costs vary according to the level of production in the following image: If the sale price is S /. 24 and sales of 15,000 units are expected, in addition, an annual profit of S /. 140,000. How many additional units must be sold at a price of S /. 20?arrow_forwardPlentiful Products is analyzing a proposed project with expected sales of 6300 units +-5%. The expected variable cost per unit is $8 and the expected fixed costs are $22000. Cost estimates are considered accurate within a range of +-4%. The depreciation expense is $6400. The sale price is estimated at $17 per unit, +-1%. What is the sales revenue under the pessimistic case scenario? Multiple choice $107100 $125685 $94684 $106029 $100728arrow_forwardAdditional Questions: 1. A company is considering a project with a cash break-even point of 14,500 units. The selling price is $14 a unit and the variable cost per unit is $8. What is the projected amount of fixed costs? 2. At a production level of 6,500 units, a project has total costs of $95,000. The variable cost per unit is $10.80. a) What is the amount of the total fixed costs? b) If the production level is increased to 7,000 units, without any change in the total fixed assets, what is the Total Costs? 3. Your company is reviewing a project with labor cost of $11.60 per unit, raw materials cost of $24.58 a unit, and fixed costs of $12,000 a month. Sales are projected at 10,000 units over the four-month life of the project. What are the total variable costs and total cost of the project?arrow_forward
- Estimates for a construction project appear in the following table: Dear optimistic most likely pessimistic Cost ($) 60,000 80,000 120,000 Annual profit ($) 16,000 15,000 13,500 Useful life (years) 10 10 10 Residual value ($) 0 0 0 Calculate the weighted average for costs and benefits, assigning 4 times more weight to the most probable estimate. Calculate the average internal rate of return. a)Weighted Average of Cost b)Weighted Average of Annual Profits c)Average internal rate of returnarrow_forwardA company is considering a project with a cash break-even point of 25,394 units. The selling price is RM18 a unit, the variable cost per unit is RM8, and depreciation is RM89, 800. What is the projected amount of fixed costs? Select one: a. RM253,94O b. RM306,108 c. RM324,512 d. RM316,728arrow_forwardEstimates for a construction project appear in the following table: Dear optimistic most likely pessimistic Cost ($) 60,000 80,000 120,000 Annual profit ($) 16,000 15,000 13,500 Useful life (years) 10 10 10 Residual value ($) 0 0 0 Calculate the weighted average for costs and benefits, assigning 4 times more weight to the most probable estimate. Calculate the average internal rate of return. a)Weighted Average of Cost b)Weighted Average of Annual Profits c)Average internal rate of return Submit calculationsarrow_forward
- A project has the following estimated data: Price = $46 per unit; variable costs = $31 per unit; fixed costs $19,000; required return = 15 percent; Initial investment $18,000; life = six years. a. Ignoring the effect of taxes, what is the accounting break-even quantity? (Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the cash break-even quantity? (Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the financial break-even quantity? (Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the degree of operating leverage at the financial break-even level of output? (Do not round Intermedlate calculations and round your answer to 3 decimal places, e.g., 32.161.) Accounting break-even quantity a. b. Cash break-even quantity с. Financial break-even quantity d. DOL eg EA9F9D41-D35...jpeg 8A1B4474-4751..jpeg…arrow_forwardA project has the following estimated data: Price = $56 per unit; variable costs = $35 per unit; fixed costs = $18,500; required return = 8 percent; initial investment = $45,000; life = five years. a. Ignoring the effect of taxes, what is the accounting break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the cash break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the financial break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the degree of operating leverage at the financial break-even level of output? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. Accounting break-even quantity b. Cash break-even quantity c. Financial break-even quantity d. DOLarrow_forwardMagellen Industries is analyzing a new project. The data they have gathered to date is as follows: Sales quantity Sales price per unit Variable cost per unit Fixed cost Multiple Choice J Initial requirement for equipment: $120,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value. Required rate of return: 15% Marginal tax rate: 35% .93 What is the degree of operating leverage under the worst-case scenario? 1.07 1.93 Lower Bound 2.07 9500 $9.75 $4.80 $15,000.00 1.63 Expected Value 10000 $10.00 $5.20 $18,000.00 Upper Bound 10500 $10.25 $5.60 $21,000.00arrow_forward
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