1. A 10-year project that aims at manufacturing and selling metal alloy sheets requires $124.80 million in upfront investment (all in depreciable assets), $60 million of which is borrowed capital at an interest rate of 5.60% per year. The expected sheet sales are 3,328,000 units per year. The expected price per sheet is $325 and the variable cost is $280 per unit. The fixed costs excluding depreciation are expected to be $46 million per year for ten years. The upfront investment will be depreciated on a straight-line basis for the 10-year life of the project to $15.60 million book value. The expected salvage value of the assets is $21 million. The tax rate is 28% and the RRR applicable to the project is 14%.

a. Calculate the accounting and cash break-even points.

b. Calculate the DOL, DFL, and DCL

(c. Calculate the NPV breakeven annual free cash flow for the project.

d.) Calculate the NPV break-even point (Qb).