Exam (elaborations)
FIN3701 Assignment 02 Semester 1 2023 (678669) Detailed Solutions
- Institution
- University Of South Africa (Unisa)
This document contains suggested solutions & detailed explanations. For assistance, call or .
[Show more]
Content preview
Financial ManagementFIN3701
Semester 1
ASSESSMENT 2
, QUESTION 1
1.1. Calculate the operating break-even point for structures A, B and C.
Operating break even = Fixed operating costs
Price – Variable cost/unit
Structure A
QOBE = 45 000 = 4 054 units
25 – 13.90
Structure A
QOBE = 30 000 = 4 000 units
17.5 – 10
Structure C
QOBE = 90 000 = 5 294 units
29 – 12
Other things equal, a firm that chooses operating and financial structures that result
in greater total fixed costs will have a higher break-even quantity of sales.
1.2 Arrange/show the operational risk of the three structures from least to most risky.
DOL (measure of operational risk) is highest at low levels of sales and declines at
higher levels of sales.
Ranking from least risky to most risk C, B and A
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller knowledgehut. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52510 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now