Given the Following Information, Calculate the Present Value Break-Even Point

question 65

Multiple Choice

Given the following information, calculate the present value break-even point. Initial investment: $2,000
Fixed costs: $2,000 per year
Variable costs: $6 per unit
Depreciation: $250 per year
Price: $20 per unit
Discount rate: 10%
Project life: 4 years
Tax rate: 34%

• A)100 units per year
• B)143 units per year
• C)202 units per year
• D)286 units per year
• E)None of the above

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Definitions:

Predictable Variability

Variations in demand, supply, or processes that can be anticipated and planned for based on historical data or trends.

Profitability

The financial metric used to assess the ability of a business to generate earnings compared to its expenses and other relevant costs.

Seasonal Workforce

Employment that changes with the seasons, often increasing during peak production times and decreasing in off-peak seasons.

Peak Season

The time of year when demand for services or goods is highest, often leading to increased business activity.