A firm is considering a project manufacturing antennas. The up-front cost of purchasing the equipment needed...

 

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A firm is considering a project manufacturing antennas. The up-front cost of purchasing the equipment needed to manufacture the antennas is $20 million. This equipment will be depreciated straightline over the 10- year life of the project. After 10 years, the equipment will be worthless and the firm expects to shut down the antenna project. The firm expects to be able to sell 2 million antennas each year for a price of $75 per antenna for each of the next 10 years. It is anticipated that the cost of producing each antenna will be $52 and that there will be annual fixed costs associated with this project of $25 million per year, The firm's tax rate is 28%. What is the accounting breakeven cost of producing each unit for this project? A firm is considering a project manufacturing antennas. The up-front cost of purchasing the equipment needed to manufacture the antennas is $20 million. This equipment will be depreciated straightline over the 10- year life of the project. After 10 years, the equipment will be worthless and the firm expects to shut down the antenna project. The firm expects to be able to sell 2 million antennas each year for a price of $75 per antenna for each of the next 10 years. It is anticipated that the cost of producing each antenna will be $52 and that there will be annual fixed costs associated with this project of $25 million per year, The firm's tax rate is 28%. What is the accounting breakeven cost of producing each unit for this project?

Answer rating: 100% (QA)

Heres how to calculate the accounting breakeven cost per unit for this project 1 Calculate annual depreciation Equipment cost 20 million Useful life 1... View the full answer