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The Marx Brewing Company recently installed a new bottling machine. The machine's initial cost is...

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The Marx Brewing Company recently installed a new bottling machine. The machine's initial cost is $2,000 and can be depreciated on a straight-line basis to a zero salvage in 5 years. The machine's per-year fixed cost is $1,800, and its variable cost is $0.50 per unit. The selling price per unit is \$1.50. Marx's tax rate is 34%, and it uses a 16% discount rate. a) Calculate the accounting break-even quantity on the new machine. b) Calculate the present value break-even quantity on the new machine. c) If Marx can sell 2500 units each year how much value can this machine bring to Marx Brewing? d) The CFO of Marx Brewing would like to assess the potential risk of this machine. She wants to know how much value will change if the sales revenue falls by 10%. Prepare your estimate for the CFO with supporting calculations. Does your estimate depend on your assumption about the fall in sales? Explain

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