A company is considering a 5-year project that opens a new product line and requires an initial
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Question:
A company is considering a 5-year project that opens a new product line and requires an initial outlay of $84,000. The assumed selling price is $97 per unit, and the variable cost is $53 per unit. Fixed costs not including depreciation are $25,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 12% per year, what is the financial break-even point?
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