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Problem:

The Marx Brewing Company recently installed a new bottling machine. The machine's initial cost is $2,000, and can be depreciated on a straight line basis to zero salvage in 5 years. The machine's fixed cost per year is $1,800, and its variable cost is $0.50 per unit. The selling price per unit is $1.50. Marx's tax rate is 34%, and it uses a 16% discount rate.

Required:

Calculate the accounting break-even point on the new machine, as well as the present value break-even point on the new machine. Please provide step by step solution and also provide whole calculation.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145896

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