The discount rate for the company is 13 percent
Question # 00395049
Posted By:
Updated on: 09/26/2016 01:07 AM Due on: 09/26/2016
am considering investing in a company that cultivates abalone for sale to local restaurants.
Sales price per abalone is $34.00
Variable cost per abalone is $5.10
Fixed costs per year is $365,000
Depreciation per year is $110,000
Tax rate is 34%
The discount rate for the company is 13 percent, the initial investment in equipment is $660,000, and the project's economic life is six years. Assume the equipment is depreciated on a straight-line basis over the project's life.
What is the accounting break-even level for the project?
What is the financial break-even level for the project?
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Rating:
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Solution: The discount rate for the company is 13 percent