Financial Break-Even Martinez, Inc., has purchased a brand new machine to produce its High Flight line...

Transcribed Image Text:

Financial Break-Even Martinez, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $480,000. The sales price per pair of shoes is $71, while the variable cost is $28. Fixed costs of $295,000 per year are attributed to the machine. The corporate tax rate is 21 percent and the appropriate discount rate is 8 percent. What is the financial break-even point? Financial Break-Even Martinez, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $480,000. The sales price per pair of shoes is $71, while the variable cost is $28. Fixed costs of $295,000 per year are attributed to the machine. The corporate tax rate is 21 percent and the appropriate discount rate is 8 percent. What is the financial break-even point?