Question
Exercise 6. As an analyst for a car company, you are asked to calculate the breakeven units level considering that sales price per unit is
Exercise 6. As an analyst for a car company, you are asked to calculate the breakeven units level considering that sales price per unit is of EUR 60,000; total fixed costs are of EUR 1,350,000 and the variable costs per unit is EUR 3,000. Explain your result. However, as a car is a multiproduct company therefore you prefer calculating the break-even level of revenues. Considering that the company generated sales for EUR 4 million this year, what would be the break even level of revenues? The car company holds debt as 30% of its revenues last generated and equity for 40%. The cost of equity of the company is of 1,5% and the cost of debt of 2,5% and the company pays a corporate tax rate of 19%. What would be its WACC (weighted average cost of capital)?
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