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Calculating break even sales and terminal value

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1. Company makes rubber stamps which sells for $400 each; their fixed costs are $75,000 and variable costs are $250 per rubber stamp. What is the break even point in dollars and in units?

2. What is the terminal value at the end of 3 years for $100 deposit per year if it earns interest at 8% compounded annually?

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Solution Summary

There are two problems. Solution to first problem describes the steps to calculate break even point. Solution to second problem describes the methodology to determine terminal value.

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1.
Selling price=P=$400
Fixed Costs=F=$75000
Variable Cost=V=$250
Break even point in units=F/(P-V)=75000/(400-250)= ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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