If a Firm Has a Price of $6

question 57

Multiple Choice

If a firm has a price of $6.00, a variable cost per unit of $4.00, and a break-even point of 40,000 units, fixed costs are equal to _____.

• A)$27,000
• B)$90,000
• C)$80,000
• D)$50,000

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Definitions:

Mutually Exclusive

Decisions or projects that, if chosen, prevent the selection of one or more other options.

Present Value

The present value of a future amount of money or series of cash flows, adjusted for a certain return rate.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, using cash flow estimates without considering the time value of money.

Internal Rate

A financial metric, often referring to the internal rate of return (IRR), which is used to evaluate the profitability of potential investments.