3 . Calculating Projected Net Income A proposed new investment has projected sales of $ 635,000 . Variable costs are 44 percent of sales , and fixed costs are $ 193,000 ; depreciation is $ 54,000 . Prepare a pro forma income statement assuming a tax rate of 35 percent . What is the projected net income ?
13 . Project Evaluation Dog Up ! Franks is looking at a new sausage system with an installed cost of $ 540,000 . This cost will be depreciated straight-line to zero over the project ’ s five-year life , at the 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 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 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 .