Question
Complete an Accounting Breakeven and Economic Breakeven Analysis for the following: A cell phone manufacturers cost of capital is 10% and the initial investment in
Complete an Accounting Breakeven and Economic Breakeven Analysis for the following:
A cell phone manufacturers cost of capital is 10% and the initial investment in a project manufacturing a new phone model is $250 million. This investment will be depreciated straight-line over the 7 year life of the phone . The firms tax rate is 30%. Each unit-price of $1,000. Variable costs are $200 per unit, while fixed costs are $200 million.
Economic Breakeven: Convert your operating cashflows to unit sales dependency, and solve for the number of units where the NPV = 0
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