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(20 points) BK Toys just bought a $200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its
(20 points) BK Toys just bought a $200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its 5 -year economic life. Each toy sells for $25. The variable cost per toy is $5, and the firm incurs fixed costs of $350,000 each year. You estimate the demand in the first year to 20,000 units and expect 10% growth per year for the life of the project. If the corporate tax rate is 25% and the discount rate is 8%, what is the break-even point for the project? (20 points) BK Toys just bought a $200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its 5 -year economic life. Each toy sells for $25. The variable cost per toy is $5, and the firm incurs fixed costs of $350,000 each year. You estimate the demand in the first year to 20,000 units and expect 10% growth per year for the life of the project. If the corporate tax rate is 25% and the discount rate is 8%, what is the break-even point for the project
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