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Ashurbanipal Ashurbanipal
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A month ago
A company is considering investing in a project, which requires the purchase of a new machine for $250,000. The asset has a six-year life, a CCA rate of 30%, and an expected salvage value of $30,000. The selling price of the product is $40 per unit, while the variable cost is $18 per unit and the fixed costs are $50,000 per year. The company's effective tax rate is 40% and cost of capital is 10%. Assume the asset class remains open after the asset is sold and the half-year rule applies for the first year. At what level of sales will the company break even?

▸ 5,170 units

▸ 4,011 units

▸ 3,102 units

▸ 6,685 units
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
Author:
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xuelixueli
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A month ago
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