1. Aaron’s Home Furnishings has a cash only credit policy. Its current sales are 340 units per month at an average price per unit of $1,850. The variable cost per unit averages $840. How many additional units per month must the firm sell to breakeven on a switch to a 30-day credit policy? The interest rate per month is .4 percent.
2.50 units
22.22 units
6.75 units
18.69 unit
2. A project requires $68,468 of equipment that is classified as a 7-year property. What is the depreciation expense in Year 5 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?