Question
Consider a project with the following estimated data per unit: Price $ 60; Variable costs = $ 37; Fixed costs = $ 12,200 ;
Consider a project with the following estimated data per unit: Price $ 60; Variable costs = $ 37; Fixed costs = $ 12,200 ; Required return = 15%; Initial Investment = $ 43,650; life = 5 years Ignoring the effect of taxes, calculate: a. Accounting break-even quantity! (10points) b. Financial break-even quantity! (10points) c. Degree of operating leverage at the accounting break-even level of output? (10points)
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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