FINC-The accounting break-even production quantity for
Subject: Business / Finance
Question
1. The accounting break-even production quantity for a project is 12,320 units. The fixed costs are $216,000 and the contribution margin per unit is $28. The fixed assets required for the project will be depreciated on straight-line basis to zero over the project's 5-year life. What is the amount of fixed assets required for this project?
A. $325,920
B. $644,800
C. $748,500
D. $1,080,000
E. $1,629,600
2. Shiny Tech, Inc. (STI) manufactures PC motherboards. The variable materials cost is $1.69 per unit, and the variable labor cost is $3.04 per unit. Suppose the firm incurs fixed costs of $750,000 during a year in which total production is 450,000 units and the selling price is $11.50 per unit. What is the cash break-even point?
A. 76,453 units
B. 88,652 units
C. 110,783 units
D. 128,907 units
E. 140,768 units
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3. We are evaluating a project that costs $854,000, has a 15-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 154,000 units per year. Price per unit is $41, variable cost per unit is $20, and fixed costs are $865,102 per year. The tax rate is 33 percent, and we require a 14 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±14 percent. What is the worst-case NPV?
A. $984,613
B. $1,267,008
C. $1,489,511
D. $1,782,409
E. $1,993,870
4. M & P has paid annual dividends of $1.05, $1.20, $1.25, $1.15, and $0.95 over the past five years, respectively. What is the average dividend growth rate?
A. -1.74 percent
B. -3.60 percent
C. 2.28 percent
D. 2.47 percent
E. 4.39 percent
5. Internet Speech.com has a beta of 1.24, a stock price of $22, and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the firm's cost of equity?
A. 7.05 percent
B. 8.67 percent
C. 9.13 percent
D. 10.30 percent
E. 10.68 percent
