Question
You have determined that an OCF of $142,098 will result in an NPV of zero. The fixed costs are $418,000, and the contribution margin per
You have determined that an OCF of $142,098 will result in an NPV of zero. The fixed costs are $418,000, and the contribution margin per unit is $87.20. The company feels that it can realistically capture 4.5% of the 120,000-unit market for this product. The tax rate is 34% and the required rate of return is 11%. Should the company develop the new product? Why?
Group of answer choices
Q Financial breakeven = 5,400 units Q Expected = 6,423 units; Yes, QExpected > QFinancial breakeven
Q Financial breakeven = 5,400 units Q Expected = 6,423 units; No, QExpected < QFinancial breakeven
Q Financial breakeven = 6,423 units Q Expected = 5,400 units; No, QExpected < QFinancial breakeven
Q Financial breakeven = 5,400 units Q Expected = 6,423 units; No, QExpected > QFinancial breakeven
Q Financial breakeven = 5,400 units Q Expected = 6,423 units; Yes, QExpected < QFinancial breakeven
Q Financial breakeven = 6,423 units Q Expected = 5,400 units; Yes, QExpected < QFinancial breakeven
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Global Corporate Finance A Focused Approach
Authors: Kenneth A. Kim
1st Edition
9814335827, 9789814335829
