Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If you want to answer these questions, please do correctly. Because I only have one-time chance to answer. Thank you! 1. Consider a project with

If you want to answer these questions, please do correctly. Because I only have one-time chance to answer. Thank you!

image text in transcribed 1. Consider a project with the following data: accounting break-even quantity = 10,300 units; cash breakeven quantity = 9,500 units; life = six years; fixed costs = $190,000; variable costs = $88 per unit; required return = 10 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Break-even quantity . 2. Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life, and requires $70,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. The tax rate is 35 percent and the discount rate is 10 percent. Calculate the NPV for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV $ System A $ System B Which conveyor belt system should the firm choose? System B System A 3 Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,980,000 in annual sales, with costs of $675,000. If the tax rate is 34 percent, what is the OCF for this project? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) OCF $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

MATLAB An Introduction With Applications

Authors: Amos Gilat

6th Edition

111938513X, 978-1119385134

More Books

Students also viewed these Finance questions

Question

How is the NDAA used to shape defense policies indirectly?

Answered: 1 week ago

Question

Relax your shoulders

Answered: 1 week ago

Question

Keep your head straight on your shoulders

Answered: 1 week ago