Ch 11 Project Analysis In-Class Assignment Project Evaluation Problem Set A project under consideration costs $900,000, has a five-year life with no salvage value and straight-line depreciation to zero. Required return is 17% and tax rate is 34%. Sales are projected at 1,000 units per year. Price per unit is $2,500 and variable cost per unit is $1,500. Fixed costs are $600,000 per year. > What is the NPV for this project? . What is the IRR for this project? Should we take the project and why? Break-even Analysis Cash Break-even Quantity Where OCF = 0 Q = (FC)(P-v) (ignoring taxes) Accounting Break-even Quantity Where NI = 0 Q = (FC + D)/(P-V) Financial Break-even Quantity Where NPV =0 What OCF (PMT) makes NPV =0? =((OCF from above) + Fixed Cost)/(P-v) Cash B-E