Question
A company's fixed operating costs are $270,000, its variable costs are $3.40 per unit, and the product's sales price is $5.80. What is the company's
A company's fixed operating costs are $270,000, its variable costs are $3.40 per unit, and the product's sales price is $5.80. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs? Round your answer to the nearest whole number.
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Hartman Motors has $32 million in assets, which were financed with $8 million of debt and $24 million in equity. Hartman's beta is currently 1.3, and its tax rate is 25%. Use the Hamada equation to find Hartman's unlevered beta, bU. Do not round intermediate calculations. Round your answer to two decimal places.
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Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current capital structure consists of 35% debt and 65% equity; however, the CEO believes that the firm should use more debt. The risk-free rate, rRF, is 3%; the market risk premium, RPM, is 7%; and the firm's tax rate is 25%. Currently, SSC's cost of equity is 14%, which is determined by the CAPM. What would be SSC's estimated cost of equity if it changed its capital structure to 50% debt and 50% equity? Do not round intermediate calculations. Round your answer to two decimal places.
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