Miller Tools Is Considering a New Project That Requires an Initial

question 71

Multiple Choice

Miller Tools is considering a new project that requires an initial investment of $81,300 for fixed assets,which will be depreciated straight-line to zero over the project's 3-year life.The project is expected to have fixed costs of $37,600 a year,and a contribution margin of $18.40.The tax rate is 34 percent and the discount rate is 15 percent.What is the financial breakeven point?

• A)2,950 units
• B)4,217 units
• C)2,200 units
• D)2,483 units
• E)3,667 units

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including income statement, balance sheet, and statement of cash flows.

Stock Market

A marketplace where stocks (shares of ownership in businesses) are bought and sold.

Return on Sales

A financial metric used to evaluate a company's operational efficiency by dividing net income by revenue.

Financial Statements

Documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.