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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
25.        Break-Even and Taxes   This problem concerns the effect of taxes on the various break-even measures.
a.   Show that, when we consider taxes, the general relationship between operating cash flow, OCF, and sales volume, Q, can be written as:
FC 1Â OCF 2Â TÂ 3Â DÂ QÂ 5Â Â Â Â Â Â Â Â Â 1 2Â T Â Â Â Â Â Â Â
PÂ 2Â v
b.   Use the expression in part (a) to find the cash, accounting, and financial break- even points for the Wettway sailboat example in the chapter. Assume a 38 per- cent tax rate.
c.    In part (b), the accounting break-even should be the same as before. Why? Verify this algebraically.
Â
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