How Many Units Need to Be Sold to Earn an Annual

question 267

Multiple Choice

How many units need to be sold to earn an annual operating income equal to 10% of sales?

• A) 44,000 units.
• B) 53,200 units.
• C) 54,500 units.
• D) 47,500 units.S = 532,000/(.35 - .10)= $2,128,000.Units to be sold = 2,128,000/40= 53,200 units.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, capturing the company's operational, investing, and financing activities.

Cost Of Capital

The minimum return rate a company needs to achieve on its investments to preserve its market valuation and draw in financing.

Cash Flow

The total sum of cash and cash-like assets moving in and out of a company.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.