The Current Annual Budget for Armstrong Ltd

question 14

Multiple Choice

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate break-even revenue per year.

• A) $7,200,000
• B) $7,000,000
• C) $5,600,000
• D) $3,200,000
• E) $8,000,000

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Definitions:

American Warrant

An instrument that grants the holder the right to buy shares of a company at a specific price before the warrant expires.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer's equity shares at certain times during its life, according to the terms of the bond.

Put Option

An agreement in finance that allows the purchaser the option, without being compelled, to sell a predetermined quantity of a basic asset at an agreed price before a certain deadline.

Call Option

A legally binding financial document that provides the acquirer the potential, albeit without the obligation, to invest in a range of assets including equities, debts, or raw materials at a price set in advance, and within an agreed period.