Question
Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $59,000 per boat. The variable costs will be
Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $59,000 per boat. The variable costs will be about half that, or $38,000 per boat, and fixed costs will be $645,000 per year. The total investment needed to undertake the project is $4,900,000. This amount will be depreciated straight-line to zero over the 6-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a required return of 20 percent on new projects. Q =FC +OCFTCD1TCPv Q = FC + OCF T C D 1 T C P v Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 24 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Cash break-even?
Accounting break-even?
Financial break-even?
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