Question 2 Which ONE of the four factors (sale price, units sold,… Question 2Which ONE of the four factors (sale price, units sold, sales growth, and cost of capital) on the slide 9 is most critical for managing the project on the slide 4? A.sale price B.units sold C.sales growth D.cost of capitalQuestion 4Which of the following statements is FALSE? A.Accounting break-even focuses on the level of a parameter for which a project’s EBIT=0. B.Economic break-even focuses on the value of a parameter for which NPV is zero. C.Accounting break-even always results in a NEGATIVE NPV. D.When the quantity sold is greater than the accounting break-even level of quantity, then the NPV is positive.Question 6As the finance manager of a company, you are presented with the following project. The company is considering the purchase of a new piece of equipment which would cost $200,000. This equipment will have a four-year useful life and have a salvage value of $0 at the end of the four-year period. It is estimated that the incremental overhead for running the equipment will be $20,000 per year. they can sell the shelves for $25 each. the cost of sales is $15 per shelf. For simplicity, we assume the levels of net working capital are zeros during the whole project life. The company has a 30% marginal tax rate and a cost of capital of 15%.Question: How many shelves does the company need to sell such that it will achieve an accounting break-even? Question 7As the finance manager of a company, you are presented with the following project. The company is considering the purchase of a new piece of equipment which would cost $200,000. This equipment will have a four-year useful life and have a salvage value of $0 at the end of the four-year period. It is estimated that the incremental overhead for running the equipment will be $20,000 per year. they can sell the shelves for $25 each. the cost of sales is $15 per shelf. For simplicity, we assume the levels of net working capital are zeros during the whole project life. The company has a 30% marginal tax rate and a cost of capital of 15%.Question: How many shelves does the company need to sell such that it will achieve an accounting break-even? Question 8As the finance manager of a company, you are presented with the following project. The company is considering the purchase of a new piece of equipment which would cost $200,000. This equipment will have a four-year useful life and have a salvage value of $0 at the end of the four-year period. The project life is also 4-year. It is estimated that the incremental overhead for running the equipment will be $20,000 per year. they can sell the shelves for $25 each. the cost of sales is $15 per shelf. Net Working Capital requirements for the project are as follows: Year 0 = $10,000 Year 1 = $15,000 Year 2 = $17,000 Year 3 = $15,000 Year 4 = $0The company has a 30% marginal tax rate and a cost of capital of 15%.Question: How many shelves does the company need to sell such that it will achieve an economic break-even? Accounting Business Financial Accounting FINANCE 623
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