You Are Considering a New Project

question 169

Multiple Choice

You are considering a new project. The project has projected annual depreciation of $11,600, total annual fixed costs of $29,001.50, and annual total sales of $46,900. The variable cost per unit is
$5) 70. What is the accounting break-even level of production?

• A) 1,015
• B) 1,085
• C) 1,105
• D) 1,125
• E) 1,215

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Definitions:

Exercise Price

The specified price on an option contract at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

2-for-1 Split

A stock split in which a company divides its existing shares into two, reducing the price per share while keeping the total market capitalization the same.

Underlying Stock

The stock that is the basis or the security that options, futures, or other derivatives contracts are derived from or based upon.

Options

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.