Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price...
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Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $40,000 per boat. The variable costs will be about half that, or $20,000 per boat, and fixed costs will be $500,000 per year.
The Base Case: The total investment needed to undertake the project is $3,500,000. This amount will be depreciated straight-line to zero over the five-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a 20 percent required return on new projects.
Q =FC +OCFTCD1TCPvQ =FC +OCFTD1TP
Use the above expression to find cash, accounting, and financial break-even points for Wettway Sailboat. Assume the tax rate is 21 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $40,000 per boat. The variable costs will be about half that, or $20,000 per boat, and fixed costs will be $500,000 per year. |
| The Base Case: The total investment needed to undertake the project is $3,500,000. This amount will be depreciated straight-line to zero over the five-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a 20 percent required return on new projects. |
Q =FC +OCFTCD1TCPvQ =FC +OCFTD1TP
| Use the above expression to find cash, accounting, and financial break-even points for Wettway Sailboat. Assume the tax rate is 21 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
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