Question
Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years.
Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line and there is no anticipated salvage value. The machine costs $575,000. The sales price per pair of shoes is $60, while the variable cost is $14. The $165,000 of fixed costs per year are attributed to the machine. Assume that the corporate tax rate is 34% and the appropriate discount rate is 8%.
Given this information, what is the economic break-even point of sale?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started