Homework answers / question archive / #1 Joy Industries is considering an expansion

#1 Joy Industries is considering an expansion

Finance

Share With

#1 Joy Industries is considering an expansion. The necessary equipment would be purchased for $19 million, and the expansion would require an additional $3 million investment in net operating working capital. The tax rate is 40%. What is the initial investment outlay?

#2 Tuff Glue Services is now in the final year of a project. The equipment originally cost $19 million, of which 75% has been depreciated. Tuff Glue can sell the used equipment today for $8 million, and its tax rate is 35%. What is the equipment's after-tax salvage value?

#3 A company's fixed operating costs are $525,000, its variable costs are $3.00 per unit, and the product's sales price is $4.50. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs?