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Old March 23rd, 2009, 05:09 PM
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Default 2 Finance Questions Please Help!

8. Given the following information, what is the financial break-even point? Initial investment = $300,000; variable cost = $120; fixed cost = $65,000; price = $150; life = six years; required return = 10%; depreciation = $50,000; salvage value of assets = $25,000; initial net working capital investment = $10,000. Ignore taxes.

a. 1,392 units
b. 2,600 units
c. 3,972 units
d. 4,005 units
e. 4,388 units

9. A project requires an initial equipment purchase of $480,000, which will be depreciated straight-line to zero over the life of the project. The equipment will have no salvage value. Annual fixed costs are projected at $266,800. The selling price per unit is $9.90 with a variable cost per unit of $6.65. The project has a 6-year life and a required rate of return of 12%. What is the accounting break-even quantity if taxes are ignored?

a. 82,092
b. 91,538
c. 106,708
d. 109,813
e. 112,634

It would be very kind if someone can help me with these 2 problems. And if you can explain how you came to the answer! Thanks!!
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