Kurt's Coffees Has a New Hot Drink in Mind That

Multiple Choice

Kurt's Coffees has a new hot drink in mind that is expected to generate sales of 24,000 units over its 2-year life.The initial cost for equipment is $69,500.This equipment will be depreciated straight-line to zero over 2 years and have no salvage value.The fixed costs are $17,800,and the contribution margin is $2.20.The tax rate is 35 percent,and the discount rate is 14 percent.Should this new drink be pursued? Why or why not?

A) Yes; because the financial breakeven quantity of 19,014 units is less than expected sales
B) Yes; because the financial breakeven quantity of 18,648 units is less than expected sales
C) Yes; because the financial breakeven quantity of 29,101 units exceeds the expected sales
D) No; because the financial breakeven quantity of 19,014 units is less than expected sales
E) No; because the financial breakeven quantity of 29,101 units exceeds the expected sales