Question: A product sells for $5 per unit. The variable cost of production is $3 per unit. Total fixed costs per year are $1000, including depreciation
A product sells for $5 per unit. The variable cost of production is $3 per unit. Total fixed costs per year are $1000, including depreciation expense of $200. What is the cash flow breakeven point in units and in dollars?
| A. | 500 units and $2500. | |
| B. | 333 units and $1665. | |
| C. | 400 units and $2000. | |
| D. | 267 units and $1333. |
A venture in steady state has $4 of sales for each $i of assets, $2 of assets for each $1 of sales, has a rate of return on sales of 10%. If it pays no dividends, what is its sustainable growth rate?
| A. | 40% | |
| B. | 10% | |
| C. | 80% | |
| D. | 20% |
A venture has a sustainable growth rate of 15% per year. The entrepreneur wants to target a growth rate of 25%. To achieve this in a way that would not change the ratios comprising its sustainable growth rate, the entrepreneur must.
| A. | Add 10% of new equity each year. | |
| B. | Add 10% new debt each year. | |
| C. | Maintain its profitability and dividend payout ratio. | |
| D. | All of the above |
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