FIN 370 Week 3 Risk and Return Problem Sets ( 7-21,7-27,8-
19,8-21,9-33 )
end of which the sausage system can be scrapped for $ 80,000 . The sausage system will save the firm $ 170,000 per year in pretax operating costs , and the system requires an initial investment in net working capital of $ 29,000 . If the tax rate is 34 percent and the discount rate is 10 percent , what is the NPV of this project ?
• Ch . 11 : Questions 1 & 7 ( Questions and Problems section )
1 . Calculating Costs and Break-Even [ LO3 ] Night Shades , Inc . ( NSI ), manufactures biotech sunglasses . The variable materials cost is $ 9.64 per unit , and the variable labor cost is $ 8.63 per unit . a . What is the variable cost per unit ? b . Suppose NSI incurs fixed costs of $ 915,000 during a year in which total production is 215,000 units . What are the total costs for the year ? c . If the selling price is $ 39.99 per unit , does NSI break even on a cash basis ? If depreciation is $ 465,000 per year , what is the accounting break-even point ?
7 . Calculating Break-Even [ LO3 ] In each of the following cases , calculate the accounting break-even and the cash break-even points . Ignore any tax effects in calculating the cash break-even .
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FIN 370 Week 3 Risk and Return Problem Sets ( 7-21,7-27,8-
19,8-21,9-33 )
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FIN 370 Week 3 Risk and Return Problem Sets Complete the following problem sets from Chapter 7 in Microsoft ® Excel ® :