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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