Barbarita’s Linens want to expand into the store next door to set up a Baby Supply Store. She needs $150,000 for the build out and new inventory of the project.
Barbarita has a $250,000 line of credit from Hialeah National bank that is fully available at an interest rate of 6 percent. $1,000,000 in equity with a cost of 3 percent. The Barbarita’s Linens just cancelled the $600,000 in preferred stock to Tia Olga, which paid an annual dividend of 10%. The companies’ tax rate is 30%.
How much will the expansion of Barbarita’s Baby Supply Store need to sell in dollars and units to break- even? The 3 items that the store will sell each are $15 and generate a $5 profit. Continue with information from above.
How many units are needed to break even?
How many dollars will the store need to sell to break-even?