1 The Jing-Spinner Company has the following cost information on its new prospective project. What is the accounting break-even point (costs = revenue) unit selling price if volume is 700?

Initial investment: $700 Fixed costs (w/o Depr): $200 per year Variable costs: $6.50 per unit Depreciation: $150 per year

a. $7

b. $8

c. $9

d. $10

e. $11

2. Your firm is considering a project with a five-year life and an initial cost of $120,000. The discount rate for the project is 10%. The firm expects to sell 2,100 units a year. The expected cash flow per unit is $20. The firm will have the option to abandon this project after three years at which time it expects it could sell the project for $75,000. If this project sees units fall to 1,960 in the last two years, then which is the highest cash flow per unit that the firm will be willing to abandon?

a. $20

b. $22

c. $24

d. $26

e. $28