a. The break-even point equals Fixed Cost divided by Contribution per unit. This results in a break-even point of $1,500,000 divided by $19.95, which equals 75,188 subscribers. b. The new break-even point would be calculated by $1,500,000 divided by $24.95, yielding 60,120 subscribers. c. Currently, the subscriber base consists of 73,000, and after accounting for a loss of 10,000 subscribers, the adjusted total is 63,000. Since 60,120 subscribers are required to break even, the company remains profitable with 2,880 extra subscribers exceeding the break-even number.
The equation for value created is the sum of hard and soft synergies minus transaction costs. M&A transaction equations capture the merging and acquisition dynamics, where 'value created' signifies earnings surpassing initial expectations. Synergies reflect enhanced efficiency from resource integration, resulting in combined valuations exceeding individual contributions. Hard synergies represent cost savings from shared resources while soft synergies arise from increased revenues. Transaction costs are the expenses linked to the merging and acquisition process.
Company 4's times interest earned ratio stands at 14.3.
