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A project requires an initial investment of $10,000, straight-line depreciable to zero over 4 years. The discount rate is 10%. Your tax bracket is 34%
A project requires an initial investment of $10,000, straight-line depreciable to zero over 4 years. The discount rate is 10%. Your tax bracket is 34% and you receive a tax credit for negative earnings in the year in which the loss occurs. Additional information for variables with forecast error are shown below. Lower Bound Unit Sales Price/unit Variable cost/unit Fixed costs Base Case 3,000 $14 $9 $9,000 2,750 $13 $8 $8,500 Upper Bound 3,250 $16 $10 $10,000 QUESTION 17 What is the base case financial break-even point? Ignore taxes. 1500 1917 2300 2431 2535
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