Breakeven analysis Suppose you are evaluating a 4-year project, where each year is projected to be identical.
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Breakeven analysis Suppose you are evaluating a 4-year project, where each year is projected to be identical. The NINV of the project is $897,000, and the company’s WACC is 7.6 %.
a. What level of net cash flow each year would be the breakeven amount, where the project would have NPV of $0?
b. Assume you know the depreciation each year is $56,000, costs of goods sold are 46 % of sales, and the firm has a 35 % tax rate. Given this, what level of sales would generate the breakeven cash flow level?
c. If you have calculated the NPV to be $145,000, what level of sales is your best estimate?
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Applied Corporate Finance Questions Problems And Making Decisions In The Real World
ISBN: 9781493952991
1st Edition
Authors: Mark K. Pyles
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