KMW Inc Sells a Finance Textbook for $150 Each

question 4

Multiple Choice

KMW Inc. sells a finance textbook for $150 each. The variable cost per book is $30 and the fixed cost per year is $30,000. The process of creating a textbook costs $150,000 and the average book has a life span of 3 years. Using straight line depreciation and a tax rate of 25%, what is the economic or present value break even number of books that must be sold given a discount rate of 12%?

• A) 582
• B) 667
• C) 805
• D) 953

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Definitions:

Computer Programs

Sequences of instructions written to perform a specified task with a computer.

Methanol

A simple alcohol used as a solvent, antifreeze, fuel, and as feedstock for chemical manufacturing.

Ethanol

A renewable, flammable liquid alcohol used as a biofuel additive for gasoline and as a solvent in the chemical industry.

R-value

A measure of thermal resistance, indicating the ability of an insulating material to resist heat flow; higher values indicate better insulation.