The accumulative cash fows that will oocur no mater the project is accepted o D.

Question

The accumulative cash fows that will oocur no mater the project is accepted o D. The actual cash flows that wil oocur no mater the project is accepted or not 1. Which of the bellowing break even will have the largest unit A. Financial BE B. Accounting BE C. Economic BE D. Cash BE A project requires an initial investment of S1,000,000 and is depreciated straight-line to zero salvage over its 10-year life. The project produces items that sell for $1,o0o each, with variable costs of $700 per unit. Fixed costs are $350,000 per year. 32. What is the accounting break even? A. 1200 B. 1300 C. 1400 D. 1500 33. What is the operating cash flow under accounting break even? A. 500,000 B. 600,000 C. 700,000 D. 100,000 34. What is the DOL? A. 3.5 B. 3.6 C. 4.5 D. 5.5

Explanation / Answer

1)Depreciation = 1000000/10 = 100000

Total fixed cost(assuming depreciation is not included )= 350000+100000= 450000

Accounting break even =Fixed cost /(price- variable cost]

                = 450000/[1000-700]

                 = 450000/300

               = 1500

correct option is "D"

2)At accounting breakeven ,profit /(loss) is 0

Operatin g cash flow = Income after tax + depreciation

                = 0 +100000

                  = 100000

correct option is "D"

3)Degree of operating leverage =450000/100000

                          = 4.5

correct option is "C"

                    =

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.