Question
(Chapter 7 Short-answer question. Use the following information to answer questions 9 to 11.) Given that you have nearly finished BA 7020, your manager and
(Chapter 7 Short-answer question. Use the following information to answer questions 9 to 11.) Given that you have nearly finished BA 7020, your manager and the Big Box Co. gives you the following information about a prospective 10-year project: Investment in fixed asset costing $2,700,000, annual fixed costs of $1,510,200, variable costs per unit of $260.40, a sales price per unit of $402.82, a discount rate of 14 percent, and a tax rate of 21 percent. The asset will be depreciated straight-line to zero over the life of the project. The manager asks you to Compute the financial break-even sales quantity. If you expect to sell 13,700 units every year will you accept the project and why?
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