The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven unit if the contribution margin is $20.

The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven unit if the contribution margin is $20.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 1P

See similar textbooks

Related questions

Q: Project L costs $46,572.76, its expected cash inflows are $11,000 per year for 8 years, and its WACC…

A: Capital investment refers to all those activities that a business entity undergoes while allocating…

Q: The initial cost of a project is 2,180,441 and annual income is 597,733. The expected life to be 12…

A: Capital budgeting is the process in which various projects and alternatives are evaluated and…

Q: he irr of the project is 12% and the present value of operating cash flow is $ 22000 the life of the…

A: Break-even point is calculated by dividing the fixed cost by the contribution margin.

Q: Project L costs $40,000, its expected cash inflows are $9,000 per year for 8 years, and its WACC is…

A: Modified internal rate of return (MIRR) is the rate of return provided by the project. In this…

Q: Project L costs $40,000, its expected cash inflows are $12,000 per year for 11 years, and its WACC…

A: The payback period is the time taken by the investment to recover the cost of the investment.

Q: There is a project that requires an investment of 20 thousand usd and its expected benefit is 7,500…

A: Internal rate of return: The internal rate of return is the rate at which the net present value of…

Q: Project L costs $50,000, its expected cash inflows are $8,000 per year for 7 years, and its WACC is…

A: Project's Payback Period = Initial Investment / Expected annual cash inflows

Q: Project L costs $59,988.21, its expected cash inflows are $12,000 per year for 11 years, and its…

A: The internal rate of return is the rate at which the present value of cash inflows are equal to the…

Q: A project is expected to generate annual revenues of $117700, with variable costs of $74,800, and…

A: The term "annual sales revenue" shows the gross earnings before adjusting any expenses generated by…

Q: The initial cost of a project is 2,180,441 and annual income is 597,733 . The expected life to be 12…

A: Initial Cost = 2,180,441 Annual Income = 597,733 Life = 12 years MARR = 15%

Q: Project A costs $67,775, its expected net cash inflows are $10,000 per year for 10 years, and its…

Q: The IRR of the project is 12% and the present value of operating cash flow is $22000. The life of…

A: The financial break-even is the level of point where company reached the position of zero net income…

Q: Project A costs $41400, its expected net cash inflows are $13400 per year for 8 years, and its WACC…

A: Here, The present value of net cash inflows is 'PVCI' Future value is 'FV' Cost of capital is 'r'…

Q: Suppose a project costs $2,200 and produces cash flows of $640, $800 and $1,900 in each of the first…

A: IRR can be calculated by following function in excel IRR can be calculated by following function…

Q: Project L costs $40,000, its expected cash inflows are $11,000 per year for 11 years, and its WACC…

A: Project's Payback period = Initial Investment / Annual Cashflow

Q: An investment of $875,000 in equipment will produce annual profits of $175,000 for eight years. The…

A: Investment amount = $ 875000 Annual profit = $ 175000 Residual value = $ 40000 Period = 8 Years

Q: A project that provides annual cash flows of $11,200 for 20 years costs $175,000 today. What is the…

A: The profitability index can be calculated as the ratio of present value of cash inflows and initial…

Q: The accounting breakeven quantity is 7,440 units. The cash breakeven quantity is 6,800 units. Life…

A: Introduction: Break even point is the point at which there is not profit or loss. At this point…

Q: onsider the following project. Costs: $100,000, at time t = 0. $45,000, at time t = 4. Income: Three…

A: The question is based on the concept of calculating the future value of cash flows in a project at…

Q: A project with a useful life of eight years requires an investment of $200,000 and yields after tax…

A: Income after tax = $ 30,000 Investment = $ 200,000

Q: Project L costs $45,000, its expected cash inflows are $12,000 per year for 9 years, and its WACC is…

A: Given: Annuity = $12,000 Interest rate = 11% Time period = 9 years Present value of outflows =…

Q: project requires an initial investment of P300,000 on equipment. The project will generate sales…

A: Salvage value of equipment 0 as it will be sold at book value that is 300000, so no depreciation…

Q: Project L costs $40,000, its expected cash inflows are $12,000 per year for 7 years, and its WACC is…

A: Payback period is the amount of time taken by the project to recover its initial cash invested.…

Q: Project L costs $45,000, its expected cash inflows are $8,000 per year for 11 years, and its WACC is…

A: Formulas:

Q: Thompson's has determined that a new project has expected fixed costs of $132,378, a contribution…

A: The point where total revenues are equal to total expenses incurred from production is called the…

Q: A project has annual cash flows of $5,000 for the next 10 years and then $9,000 eachyear for the…

A: Working of the NPV is presented: Note: Cash outflows have been calculated using IRR because it is…

Q: Project L costs $54,050.02, its expected cash inflows are $12,000 per year for 9 years, and its WACC…

A: Formulas:

Q: Jones Company’s new truck has a cost of $20,000, and it will produce end-of-year net cash inflows of…

A: The modified internal rate of return (MIRR) is a financial indicator of the attractiveness of an…

Q: A project has an initial cost of $8,500 and produces cash inflows of $2,700, $4,800, and $1,600 over…

A: The discounted payback period calculates the time taken for the project to return the initial…

Q: Project L costs $65,000, its expected cash inflows are $11,000 per year for 7 years, and its WACC is…

A: Computation of the payback period:

Q: The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of…

A: The following calculations are done to compute the financial break even point.

Q: Project A costs $67775, its expected net cash inflows are $10000 per year for 10 years, and its WACC…

Q: Project L costs $70,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is…

A: Using excel MIRR function

Q: A project consists of an annual investment 47,000.00 for four years, with no residual values. The…

A: We use different capital budgeting tools to determine the financial feasibility and viability of…

Q: Project L costs $55,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is…

A: Here, Cost of Project is $55,000 Expected Annual Cash Inflow is $12,000 Time Period is 8 years WACC…

Q: Project L costs $45,041.68, its expected cash inflows are $10,000 per year for 9 years, and its WACC…

A: The internal rate of return refers to a metric used in capital budgeting for measuring…

Q: A project has estimated to cost $64,025. and provide annual net cash flows of $15,000 for 6 years.…

A: Given: Initial cost estimated = $64,025 Annual net cash flow = $15,000 Term = 6 years

Q: Project L costs $65,000, its expected cash inflows are $12,000 per year for 9 years, andits WACC is…

A: The method used to calculate returns assuming that the cost incurred as initial investment in a…

Q: Project NAG generates positive cash flows of $60,000 per year at the end of each of the next five…

A: In we need to calculate the cost of project from net present value.

Q: A project costing $6,200 initially should produce cash inflows of $2,860 a year for three years. The…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: The IRR of the project is 12% and the present value of operating cash flow is $22,000. The life of…

A: IRR= 12% PV of operating cash flow= $22,000 Project Life= 6 years Fixed cost= $2,000 per year…

Q: Project L costs $45,000, its expected cash inflows are $15,000 per year for 11 years, and its WACC…

A: The payback period refers to the time required by an investment to cover its initial investment.…

Q: Project L costs $65,000, its expected cash inflows are $12,000 per year for 9 years, andits WACC is…

A: A discount rate at which the net present worth of an investment is equal to zero is term as internal…

Q: Project L costs $65,000, its expected cash inflows are $12,000 per year for 9 years, andits WACC is…

A: NPV = Present value of expected cashflows - Initial Investment

Q: Project L costs $35,000, its expected cash inflows are $8,000 per year for 8 years, and its WACC is…

A: Given: Initial investment =$35000Annual cash inflows =$8000Life of project =8 yearsWACC =11%Finance…

Q: A project has an initial outlay of $2,255. The project will generate annual cash flows of $536 over…

A: Net present value (NPV) of a project (or an investment) refers to how much value the project…

Question

The IRR of the project is 12% and the present value of operating cash flow is $22,000. The
life of the project is 6-years and fixed is $2,000 per year. Compute the financial breakeven
unit if the contribution margin is $20.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?
A project requires an initial investment of 19,000 dollars. The lifetime of the project will be 10 years with a cashflow stream of 1,000 per year and an interest rate of 6.31. Compute the Savings/Investment ratio.
A project will cost $10,000 up front and $1,000 each year thereafter. The project will bring in $1,000 the first year, then $5,000 each year after. What is the breakeven point (payback period) for the project?
The irr of the project is 12% and the present value of operating cash flow is $ 22000 the life of the project is 6 years and fixed is $ 2000 per year compute the financial breakven unit the contribution margin is $20
A new project will have an intial cost of $10,000. Cash flows from the project are expected to be $3,000, $3,500, and $4,000 over the next 3 years, respectively. Assuming a discount rate of 8%, what is the project's Payback Period?
An investment project costs $120,000. It is expected to have an annual net cash flow of $30,000 for 5 years. ?What is the project's payback period
A new project will have an intial cost of $15,000. Cash flows from the project are expected to be $4,000, $6,000, and $8,000 over the next 3 years, respectively. Assuming a discount rate of 10%, what is the project's IRR?
A project has an initial outlay of $2,255. The project will generate annual cash flows of $536 over the 5-year life of the project and terminal cash flows of $328 in the last year of the project. If the required rate of return on the project is 17%, what is the net present value (NPV) of the project?
A project has the following cash flows. It costs $15,000. It briongs in $22,000 after one year, and costs an adittional $6,500 after two years. The Required rate of return is 11%. Calculate the MIRR using the combination approach.
A project that provides annual cash flows of $22,500 for 7 years costs $84,000 today. a. If the required return is 12 percent, what is the NPV for this project? b. Determine the IRR for this project.
Initial cash outlay is $50,000. The required rate of return is 9%. The length of time of the project is 6 years. Each year the project is expected to provide $12,500 of free cash flow. a. Calculate NPV b. Calculate the (estimated) IRR