1.What is the breakeven in units for a company with $6.4 million in sales, $2.4

Question

1.What is the breakeven in units for a company with $6.4 million in sales, $2.4 million in fixed costs, a selling price of $1,400 per unit and variable costs of $800 per unit? Does this mean their net income is zero?

a. 4000, no

b. 4000, yes

c. 10,000, no

d. 10,000, yes

2. A 2:1 stock split occurs. The initial stock price was $140 and you held 2000 shares. How many shares will you own after the split and what will be the post-split price per share?

a. 2000, $70

b. 4000, $70

c. 4000, $140

d. 2000, $70

3. ABC Company has an inventory conversion period of 75 days, receivables collection period of 35 days and payables deferral period of 30 days. What is their CCC? Would it be better or worse for cash management if the inventory conversion period went to 80 days?

a. 140 days, worse

b. 80 days, better

c. 80 days, worse

d. 140 days, better

4. Zedco and Associates has $3 million in cash from the recent sale of a business unit and a goal of repurchasing stock. Their Po is $30 with No of 3.2 million. How many shares will remain after the repurchase?

a. 1,900,000

b. 2,900,000

c. 3,100,000

d. 3,000,000

5. If I have $1 million in retirement investments how much can I withdraw per year for the next 30 years and have a 0 balance at the end of year 30 if my expected return is 5.5%

a. $68,805

b. $82,611

c. $55,000

d. $142,525

Please show work.

Explanation / Answer

Answer to the first question: Option b - 4,000 units (yes) (please post each distinct question separately) -

1. Break-even point in unit = Total Fixed cost/(Sales price p.u - Variable cost p.u)

= $2,400,000/($1,400 - $800) = 4,000 units (ans)

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