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The CEO of RV USA Is Trying to Estimate Sales

question 41

Multiple Choice

The CEO of RV USA is trying to estimate sales based on a budgeted target profit before taxes of $150,000.If unit contribution margin is $5,000, total sales in June are estimated at $900,000 and fixed costs are $500,000, how many RVs must be sold to attain the target profit before taxes?

Identify and calculate the average investment amount in capital budgeting analysis.
Explain the significance of the hurdle rate and how it is used in investment decisions.
Understand the concepts of capital rationing and post-audit in capital budgeting.
Familiarize with the terms related to capital budgeting and their practical applications.

Definitions:

Coupon Rate

The annual interest rate paid by a bond relative to its face value, expressed as a percentage.

Put Provision

An option clause in a bond or preferred stock allowing the holder to sell back the security to the issuer at a predetermined price before maturity.

Bond Indenture

A legal contract between bond issuers and bondholders, specifying the terms of the bond, including its maturity date, coupon rate, and other conditions.

Maturity

The point in time when a financial instrument such as a bond or loan becomes due and payable.

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