Assume a Project Has Estimated Fixed Costs of $61,200,variable Costs

question 42

Multiple Choice

Assume a project has estimated fixed costs of $61,200,variable costs per unit of $84.29,a selling price of $199,and an initial cost of $402,000 for fixed assets.Depreciation is straight-line to zero over the project's 4-year life.The tax rate is 30 percent,and the discount rate is 12 percent.What is the financial breakeven point?

• A)1,422 units
• B)1,806 units
• C)1,366 units
• D)1,698 units
• E)1,228 units

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Definitions:

Purchase Cost

Purchase Cost is the total expense incurred to acquire an asset or service, including the price paid and any additional charges necessary to put it into use.

Accrued Interest

Interest that has been incurred but not yet paid, often referring to the interest accruing on a bond between payment periods.

Sale Received

The funds collected from the sale of goods or services.

Accrued Interest

Interest that has accumulated on a loan or bond since the last payment date but has not yet been paid out.