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  • Dec 2019 - Tutorial-FIN544 - Nur Shazleen Afina

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    Nur Shazleen Afina
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    1) The document calculates the worst case financial break-even point for an investment by setting the net present value (NPV) equal to zero. 2) It determines that the cash flow needed for the NPV to equal zero is $18,928 per year over 4 years. 3) By setting the cash flow equation equal to $18,928 and solving for Q, the annual production quantity needed for break-even is calculated to be 2,909 units.

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    Dec 2019_Tutorial-FIN544_Nur Shazleen Afina

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    1) The document calculates the worst case financial break-even point for an investment by setting the net present value (NPV) equal to zero. 2) It determines that the cash flow needed for the NPV to equal zero is $18,928 per year over 4 years. 3) By setting the cash flow equation equal to $18,928 and solving for Q, the annual production quantity needed for break-even is calculated to be 2,909 units.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    18 views2 pages

    Dec 2019 - Tutorial-FIN544 - Nur Shazleen Afina

    Uploaded by

    Nur Shazleen Afina
    1) The document calculates the worst case financial break-even point for an investment by setting the net present value (NPV) equal to zero. 2) It determines that the cash flow needed for the NPV to equal zero is $18,928 per year over 4 years. 3) By setting the cash flow equation equal to $18,928 and solving for Q, the annual production quantity needed for break-even is calculated to be 2,909 units.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    60 ,

    000/4yeass 15, 000


    depreciation
    -
    =

    - -
    co> -
    T = 0 .

    Sp
    VC
    O
    In
    Fl

    ↓ rtc
    Artic

    i) Worst case financial break-even point (NPV =


    0)
    NPV = 10 + ouF (PVIFAi , n)
    0 =
    60 , 000 + out (PVIFA 10 , 4)
    OCF = 60 , 000 13 1699
    .

    = Russ , 928. of

    OCF [CSP-VC)Q-FC (1-T)] + Depreciation


    Repreciation
    = -

    18 , 928 .

    04 =
    [(65-60)Q -

    3 , 000 -
    15, 000 (1-0 .

    ] + 15
    , 000
    18 , 928 04 .
    =
    (5Q -8 , 000) (0 6) + 15
    , 000
    .

    ↑ 8 , 928 04 . =
    30-4 , 800 + 15 , 000

    Q = 2, 909 35 cits
    .

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