Question
Complete an Accounting Breakeven and Economic Breakeven*** Analysis for the following: A cell phone manufacturer's cost of capital is 10% and the initial investment in
Complete an Accounting Breakeven and Economic Breakeven*** Analysis for the following:
A cell phone manufacturer's cost of capital is 10% and the initial investment in a project manufacturing a new phone model is $250 million. The 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. Please do everything in excel if possible.
***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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