From Kaplan:
I entered the following key strokes in my BAii Plus Professional for 2nd BRKEVN function:
P = 3.25 Q = 900,000 FC = 400,000 VC = 3.75
Oddly, the PFT computed - 850,000
When I changed Q to equal 0, the PFT computed -400,000
What am I doing wrong?
You have done nothing wrong.
It’s a lesser of two evils situation: if the company shuts down, they only lose $400,000 (fixed costs only); if the company decides to produce, they will lose $850,000 as per the calculation.
Understood, thank you. I am trying to use the BRKEVN function more frequently on the practice problems.
You know the old joke about “making it up in volume”? This is exactly what is happening here!!
A clever mind indeed.
