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 ®: