Given the following information, what is the financial break-even point? Initial investment = $300,000; variable cost = $120; fixed cost = $65,000; price = $150; life = six years; required return = 10%; depreciation = $50,000. Ignore taxes.
A) 1,392 units
B) 2,600 units
C) 4,167 units
D) 4,463 units
E) 5,561 units

Question

Quizplus · Accepted Answer

The financial break-even point is calculated by finding the number of units that need to be sold to cover all costs, including fixed costs and depreciation, while achieving the required return. The formula is: Break-even units = (Fixed Costs + Depreciation + Required Return * Initial Investment) / (Price - Variable Cost). Plugging in the values: (65,000 + 50,000 + 0.10 * 300,000) / (150 - 120) = 4,463 units.

Given the Following Information, What Is the Financial Break-Even Point