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Boehm Corporation produces satellite earth stations that sell for $150,000 each. The firm's fixed costs are $1.5 million, 20 earth stations are produced and sold

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Boehm Corporation produces satellite earth stations that sell for $150,000 each. The firm's fixed costs are $1.5 million, 20 earth stations are produced and sold each year. Profits are $400,000 and the firm's assets (all equity financed) are $5million. Due to technological advances in the industry the firm estimates that it can change its production process by adding $10 million to assets and $500,000 to fixed operating costs. This change will reduce variable costs per unit by $5,000 and increase output by 30 units. However, the sales price on all units must be lowered to $140,000 to permit sales of the additional units. Boehm Corporation has tax carryforwards that render its tax rate zero, its cost of equity is 18% and it has no debt in its capital structure. Thus, the company's prot is equal to earnings before interest and taxes (EBIT) I h. Determine the company's variable cost per unit and break-even quantity under the initial plan. i. Determine the company's variable cost per unit and break-even quantity under the proposed plan. j. Would the new proposed plan expose the rm to more or less business risk than the initial plan. Show your work

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