QUESTION 2 a) A financial analyst for a manufacturer of BMV spare part is considering using its new engine. The production of the engine can be used over the 4 years, with zero salvage value at the...


QUESTION 2<br>a) A financial analyst for a manufacturer of BMV spare part is considering using its new<br>engine. The production of the engine can be used over the 4 years, with zero salvage<br>value at the end of year 4. The project's initial investment is RM60,000 which<br>depreciates under straight-line method and its discount rate is 10 percent. The firm's<br>corporate tax rate is 40 percent.<br>LITT<br>Optimistic<br>800<br>Items<br>Expected<br>500<br>Unit sales (unit)<br>Price/unit (RM)<br>Variable cost/unit (RM)<br>Fixed costs/annum (RM)<br>75<br>50<br>2000<br>Pessimistic<br>200<br>65<br>60<br>3000<br>100<br>30<br>1000<br>Given the above information on the results of launching the new engine, you are required<br>to compute:<br>i) The worst case financial break-even point.<br>

Extracted text: QUESTION 2 a) A financial analyst for a manufacturer of BMV spare part is considering using its new engine. The production of the engine can be used over the 4 years, with zero salvage value at the end of year 4. The project's initial investment is RM60,000 which depreciates under straight-line method and its discount rate is 10 percent. The firm's corporate tax rate is 40 percent. LITT Optimistic 800 Items Expected 500 Unit sales (unit) Price/unit (RM) Variable cost/unit (RM) Fixed costs/annum (RM) 75 50 2000 Pessimistic 200 65 60 3000 100 30 1000 Given the above information on the results of launching the new engine, you are required to compute: i) The worst case financial break-even point.

Jun 05, 2022
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