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Fwebene Inc. purchased a K200,000 machine to produce toy phones. The machine will be fully depreciated at 20 % using straight-line method over a 5-year
Fwebene Inc. purchased a K200,000 machine to produce toy phones. The machine will be fully depreciated at 20 % using straight-line method over a 5-year economic life. Each toy sells for K25, the variable cost per toy is K5, and the firm incurs fixed costs of K350,000 each year. The corporate tax rate for the company is 25%. Using a 12 % discount rate, calculate the financial break-even point for the project.
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