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A project requires an initial investment of $1,500,000 and is depreciated straight-line to zero salvage over its 6-year life. The project produces items that sell
A project requires an initial investment of $1,500,000 and is depreciated straight-line to zero salvage over its 6-year life. The project produces items that sell for $900 each, with variable costs of $500 per unit. Fixed costs are $200,000 per year.
- What is the accounting break-even quantity, operating cash flow at accounting break-even, and DOL at that output level?
- What is the cash break-even quantity?
- What is the financial break-even point? at 12% discount rate.
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