Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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. FC + OCF-TCD 1-TC 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 69.60 110.76 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. FC + OCF-TCD 1-TC 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 69.60 110.76
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started