Question-BSOP 209 Week 3 Assignment Answer

S7.17

a)            What is the break-even point in units for proposal A?

b)            What is the break-even point in units for proposal B?

S7.18

Using the data in Problem S7.17:

a)            What is the break-even point in dollars for proposal A if you add $10,000 installation to the          fixed cost?

b)            What is the break-even point in dollars for proposal B if you add $10,000 installation to the           fixed cost?

S7.30

What is the net present value of an investment that costs $75,000 and has a salvage value of $45,000? The annual profit from the investment is $15,000 each year for 5 years. The cost of capital at this risk level is 12%.

S7.31

The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years. What is the net present value?