Break-Even and Taxes This problem concerns the effect of taxes on the various break-even measures.

(a) Show that, assuming straight-line depreciation, when we consider taxes, the general relationship between operating cash flow, OCF, and sales volume, Q, can be written as

(b) Use the expression in part

(a) to find the cash, accounting and financial break-even points for the Wettway yacht example in the chapter. Assume a 38 per cent tax rate.

(c) In part (b), the accounting break-even should be the same as before. Why? Verify this algebraically.