1a. Calculate the cash break-even point of Case 1.

1b. Calculate the accounting break-even point of Case 1.

2a. Calculate the cash break-even point of Case 2.

2b. Calculate the accounting break-even point of Case 2.

3a. Calculate the cash break-even point of Case 3.

3b. Calculate the accounting break-even point of Case 3.

2.

A project has the following estimated data: price = $78 per unit; variable costs = $45.24 per unit; fixed costs = $7,600; required return = 17 percent; initial investment = $13,000; life = three years. Ignore the effect of taxes.

a. What is the accounting break-even quantity?

b. What is the cash break-even quantity?

c. What is the financial break-even quantity?

d. What is the degree of operating leverage at the financial break-even level of output?

3.

We are evaluating a project that costs $801,000, has a life of thirteen years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 122,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $810,612 per year. The tax rate is 25 percent, and we require a return of 19 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 18 percent.

a. Calculate the best-case NPV.

b. Calculate the worst-case NPV.

Consider the following cases: Ignore any tax effects in calculating the cash break-even