Question
Break-even calculations are most often concerned with the effect of a shortfall in sales but they could equally well focus on any other component of
Break-even calculations are most often concerned with the effect of a shortfall in sales but they could equally well focus on any other component of cash flow. Dog Days is considering a proposal to produce and market a caviar-flavored dog food. It will involve an initial investment of $90k that can be depreciated for tax straight line over the 10 years. In each of years 1 to 10 the project is forecat to produce sales of $100,000 and to incur variable costs of 50% of sales and fixed costs of $30,000. The tax rate is 30% and cost of capital is 10%. Please show all formulas in the cells. Looking for a good spreadsheet that can be followed. a) Build the spreadsheet for the 10 years. b) Calculate the NPV and accounting break even levels of fixed costs. c) Calculate the NPV and accounting break even level rate of tax. d) How would a rise in the tax rate affect the accounting break even point.
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