1. 16.

Break-even intuition [LO 11.3] Consider a project with a required return of R per cent that costs $I and will last for N years. The project uses straight-line depreciation to zero over the N-year life; there is no salvage value or net working capital requirements.

1. At the accounting break-even level of output, what is the IRR of this project? The payback period? The NPV?

2. At the cash break-even level of output, what is the IRR of this project? The payback period? The NPV?

3. At the financial break-even level of output, what is the IRR of this project? The payback period? The NPV?