a. 50 cents
Contribution margin per unit is price per unit- variable cost per unit
1.75 - ($50,000/40,000 units)
1.75 - 1.25 = $ .50
b. $8750
Margin of safety is the expected sales - break even sales
(45,000 units * $1.75 per unit) - (40,000 *1.75)
78,750 - 70,000 = $8750
Here is the correct order of investments from Lower Risk to Higher Risk: <span> Treasury bond − Diversified mutual fund – Stock
Treasury bond is released by Government, so unless your country went bankrupt, it is safe to assume that you will get the investment back.
Diversified mutual fund puts your eggs in a lot of baskets So in case one of your investment fail, the others could still support your overall investments
Since the stock is a single entity and really fluctuative, it is considered as the most dangerous type of investment.
</span>
Answer:
D.
Municipal bond because the equivalent taxable yield is 6.6%
Explanation:
we should make the important difference that municipal bonds are tax free while corporate bonds don't.
Therefore we should solve for the after tax rate fo the corporate bond:
The corporate bond as a yield of 4.5% after taxes which is lower than the municipal bond. This make it more attractive
We can also solve for the pre-tax rate of the municipal bond:
the municipal bonds would be equivalent to a 6.6% corporate bonds.
This makes option D correct.
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