The Marx Brewing Company Recently Installed a New Bottling Machine

Essay

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 a 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. Calculate the accounting break-even point on the new machine,as well as the present value break-even point on the new machine.