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A project has the following estimated data:price=$54 per unit,variable costs =36.12 per unit ,fixed costs=$4,500;required return =8 percent,initial investment=$9,000;life=5 years.Suppose that the straight-line depreciation method
A project has the following estimated data:price=$54 per unit,variable costs =36.12 per unit ,fixed costs=$4,500;required return =8 percent,initial investment=$9,000;life=5 years.Suppose that the straight-line depreciation method is used and the effect of taxes is ignored.
1.What is the accounting break-even quantity?
2.What is the operating cash flow at accounting break-even?
3.What is the degree of operating leverage(DOL) at the accounting break-even level of output?What does the DOL imply?
4.What is the financial break-even of output?
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