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Break-Even Point Schweser Satellites Inc. produces satellite earth stations that sell for $120,000 each. The firm's fixed costs, F, are $1 million, 50 earth stations
Break-Even Point Schweser Satellites Inc. produces satellite earth stations that sell for $120,000 each. The firm's fixed costs, F, are $1 million, 50 earth stations are produced render its tax rate zero, its cost of equity is 16%, and it uses no debt. a. What is the incremental profit? Enter your answer in dollars. For example, an answer of $4 million should be entered as 4,000,000, not 4 . Round your answer to the nearest dollar. $ To get a rough idea of the project's profitability, what is the project's expected rate of return for the next year (defined as the incremental profit divided by the investment)? Round your answer to two decimal places. % Should the firm make the investment? b. Would the firm's break-even point increase or decrease if it made the change? The change would the break-even point. c. Would the new situation expose the firm to more or less business risk than one I. The new situation would obviously have less business risk than the old one. II. It is impossible to state unequivocally whether the new situation would have more or less business risk than the old one. III. The new situation would obviously have more business risk than the old one. Break-Even Point Schweser Satellites Inc. produces satellite earth stations that sell for $120,000 each. The firm's fixed costs, F, are $1 million, 50 earth stations are produced render its tax rate zero, its cost of equity is 16%, and it uses no debt. a. What is the incremental profit? Enter your answer in dollars. For example, an answer of $4 million should be entered as 4,000,000, not 4 . Round your answer to the nearest dollar. $ To get a rough idea of the project's profitability, what is the project's expected rate of return for the next year (defined as the incremental profit divided by the investment)? Round your answer to two decimal places. % Should the firm make the investment? b. Would the firm's break-even point increase or decrease if it made the change? The change would the break-even point. c. Would the new situation expose the firm to more or less business risk than one I. The new situation would obviously have less business risk than the old one. II. It is impossible to state unequivocally whether the new situation would have more or less business risk than the old one. III. The new situation would obviously have more business risk than the old one
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