1. Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo business? (Points : 2) 86,640
91,200
96,000
100,800
11.30% |
11.10% |
7.81% |
9.42% |
The market risk premium (RPM). |
The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. |
True |
The longer a project’s payback period, the more desirable the project is normally considered to be by this criterion. |
Question 10. 10. Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting? (Points : 2) |
Long-term debt.
Accounts payable.
Retained earnings.
Common stock.