Explore BrainMass

### Explore BrainMass

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

1- A company's fixed operating costs are \$ 500,000, its variable costs are \$ 3.00 per unit, and the products sales price is \$ 4.00. What is the company's breakeven point; that is, at what unit sales volume would its income equal its costs?

---

2-Assuming that the firm uses only debt and common equity, what is Jackson's optimal capital structure? At what debt ratio is the company's WACC minimized?

---

4-Unlevered beta. Harley Motors has \$ 10 million in assets, which were financed with \$ 2 million of debt and \$ 8 million in equity. Harley's beta is currently 1.2 and its tax rate is 40 percent. Use the Hamada equation to find Harley's unlevered beta, bU.

---
6-Breakeven analysis. The Weaver Watch Company sells watches for \$ 25; the fixed costs are \$ 140,000; and variable costs are \$ 15 per watch.

a. What is the firms gain or loss at sales of 8,000 watches? At 18,000 watches?

b. What is the breakeven point? Illustrate by means of a chart.

c. What would happen to the breakeven point if the selling price were raised to \$ 31? What is the significance of this analysis?

d. What would happen to the breakeven point if the selling price were raised to \$ 31 but variable costs rose to \$23 a unit?