What Is the Cash Break-Even Point? Price = $100 Per

question 409

Multiple Choice

What is the cash break-even point? Price = $100 per unit; variable cost = $24 per unit, fixed cost = $40,000 per year; depreciation = $10,000 per year. Assume a discount rate of 10%, project initial
Outlay of $100,000, project life of 10 years, and ignore taxes.

• A) 527 units
• B) 624 units
• C) 658 units
• D) 741 units
• E) 1,130 units

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Definitions:

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Exercise Price

The price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Time Value

The portion of an option's premium that is attributable to the amount of time remaining until the expiration of the option.

Call Option

An economic agreement granting the purchaser the choice, but not the duty, to acquire a stock, bond, commodity, or any asset at a previously determined price within a set period.