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# BUSI 530 CONNECT PLUS CHAPTER 10 HOMEWORK

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In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of \$4.4 million. In a good year, it can produce 4.4 million hamburgers at a total cost of \$5.0 million
A project currently generates sales of \$14 million, variable costs equal 50% of sales, and fixed costs are \$2.8 million. The firm’s tax rate is 40%. Assume all sales and expenses are cash items.
Finefodder’s analysts have come up with the following revised estimates for the Gravenstein store:
The following estimates have been prepared for a project:Fixed costs: \$36,000Depreciation: \$24,000Sales price per unit: \$2Accounting break-even: 40,000 unitsWhat must be the variable cost per unit?
Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for \$130. The materials cost for a standard diamond is \$80. The fixed costs incurred each year for factory upkeep and administrative expenses are \$206,000. The machinery costs \$1.2 million and is depreciated straight-line over 10 years to a salvage value of zero.
You are evaluating a project that will require an investment of \$17 million that will be depreciated over a period of 15 years. You are concerned that the corporate tax rate will increase during the life of the project
Modern Artifacts can produce keepsakes that will be sold for \$50 each. Nondepreciation fixed costs are \$2,900 per year, and variable costs are \$30 per unit. The initial investment of \$3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 14%
You estimate that your cattle farm will generate \$.20 million of profits on sales of \$4 million under normal economic conditions and that the degree of operating leverage is 5
Modern Artifacts can produce keepsakes that will be sold for \$240 each. Nondepreciation fixed costs are \$3,600 per year, and variable costs are \$140 per unit. The initial investment of \$10,800 will be depreciated straight-line over its useful life of 3 years to a final value of zero, and the discount rate is 8%.
A silver mine can yield 16,000 ounces of silver at a variable cost of \$34 per ounce. The fixed costs of operating the mine are \$56,000 per year. In half the years, silver can be sold for \$50 per ounce; in the other years, silver can be sold for only \$25 per ounce. Ignore taxes
An auto plant that costs \$200 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of \$260 million if the line is successful but only \$120 million if it is unsuccessful. You believe that the probability of success is only about 45%. You will learn whether the line is successful immediately after building the plant

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