Windsor Co. has just purchased a $6,000,000 machine to produce big-screen TVs. The machine can be used for 10 years and is depreciated on a
Windsor Co. has just purchased a $6,000,000 machine to produce big-screen TVs. The machine can be used for 10 years and is depreciated on a straight-line basis. Use the following information:
Sales price per TV =$1,500
Variable costs per TV =$1,100
Fixed costs per year = $120,000
Tax rate =40%
Discount rate = 8%
- How many TV must be produced and sold per year for you to receive any accounting profit?
- How many TV must be produced and sold per year for you to receive any economic profit?
- Compare your answer in parts (a) and (b). How are they related to each other and why?
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Authors: Morten Balling, Frank Lierman, Andy Mullineux
1st Edition
041529827X, 978-0415298278
