Mosler Company Has Compiled This Information for a New Project

question 4

Multiple Choice

Mosler Company has compiled this information for a new project:
Initial investment: $229,700
Fixed costs: $66,800
Variable costs: $5.07 per unit
Selling price: $12.99 per unit
Discount rate: 14 percent
Project life: 4 years
Tax rate: 34 percent
Depreciation is straight-line to zero over the project's life.What is the accounting break-even point?

• A)12,388.60 units
• B)13,200.00 units
• C)15,684.97 units
• D)11,301.82 units
• E)10,352.08 units

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Definitions:

Compounded Monthly

Describes the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a monthly basis.

Mortgage

A loan used to purchase real estate, secured by the property itself, which the borrower is obligated to pay back with a predetermined set of payments.

Balance

The amount of money in a financial repository, such as a bank account, at any given time, or the equilibrium state of an account after considering all debits and credits.

Insurance Settlement

The process where an insurance company pays out to a policyholder after a claim has been verified.