ABC company is evaluating whether or not to produce a new line of portable wireless speakers. If the firm decides to embark on this project, it needs to invest $3.2 million on production equipment.

The forecasted selling price is $100 per unit and this will increase in line with general inflation of 3% per year. Forecasted sales and production have been estimated as follows:

Year	1	2	3	4
Sales and production (units)	27,000	30,000	35,000	25,000

Due to rapid advancement in technology of audio products, the operations will cease at the end of four years.

Variable costs are about 60% of selling price. Incremental overheads, which includes primarily rental, is estimated to be $200,000 per year. Net working capital amounting 15% of sales is required at the beginning of each year. This will be fully recovered when the operations cease and scrap value of equipment is about 5% of its cost.

Depreciation is computed on a straight-line basis over the four-years. The rate of corporation tax is 17%. ABC Company has traditionally used a discount rate of 11% per year for investment appraisal.

(a) Calculate the accounting break-even and cash break-even for each of the four (4) years.

(b) Calculate the NPV break-even for this investment opportunity.

Hint: The number of units sold must be same in each of the four years.