Generous Generator Corporation's unit price for a generator is $1,200 and the variable cost per unit is $722, Generous total fixed cost is $65,000,000.

What is the Generous Corporation's contribution margin ratio and what is the breakeven sales level in dollars and units?

Generous is considering purchasing equipment that will result in reducing their variable cost by $100 a unit. In order to pay for the equipment Generous must issue bonds having a coupon of 5%. The coupon will increase the Generous Corporation fixed cost by $12,000,000.

What would be the Generous Corporation's new contribution ratio? And what would be the Generous Corporation's new breakeven sales level in dollars and units? If you were the CEO of Generous would you undertake this investment? Why or why not?