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A project has the following estimated data: price = $800 per unit; variable costs = $650 per unit; fixed costs = $900,000; required return =
A project has the following estimated data: price = $800 per unit; variable costs = $650 per unit; fixed costs = $900,000; required return = 8%; initial investment = $5,000,000; salvage value = $500,000; life = 14 years. i. What is the financial break-even quantity? [2 marks] ii. What is the operating cash flow at the financial break-even quantity? [2 marks] iii. What is the degree of operating leverage at the financial break-even quantity? [2 marks]
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