Projected free cash flows should be discounted at the firm's weighted average cost of capital to find the firm’s total corporate
1 answer:
You might be interested in
Solution :
a). At the break even units, the total contribution margin = fixed expenses
We know that : (Selling price - variable cost) x units sold = fixed expenses
i.e. (20-14)x = 225,000
6x = 225,000
x = 37,500
Therefore, the number of units sold, x = 37,500
So, the break even analysis = 37,500 x 20
= 750,000
b).
= 30%
The Breakeven sales =
= 750,000
c).
= 37.5%
d). Units needed :
units
Therefore, the sales required = 62,500 x 20
= 125,000