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FIN370 Week 2 Individual Assignment Chapter Study Questions Study Guide

FIN370 Week 2 Individual Assignment Chapter Study Questions Study Guide


Chap. 14 Questions 14-1, 14-3, 14-4
Chap. 15 Questions 15-12A, 15-13A

What are financial markets? What function do they perform? How would an economy be worse off without them?

Distinguish between the money and capital markets.

What major benefits do corporations and investors enjoy because of the existence of organized security exchanges?

You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-even point in units of output for the firm.

Allison Radios manufactures a complete line of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year. a. What is the break-even point in units for the company? b. What is the dollar sales volume the firm must achieve in order to reach the break-even point? c. What would be the firm’s profit or loss at the following units of production sold: 12,000 units? 15,000 units? 20,000 units?