Question
Construction project requires an intial investment of $900,000, has a nine-year life, and salvage value is Zero. Sales are projected at 75,000 units per year.
Construction project requires an intial investment of $900,000, has a nine-year life, and salvage value is Zero. Sales are projected at 75,000 units per year. Price per unit is $47, variable cost per unit is $34, and fixed costs are $825,000 per year. The tax rate is 35%, and discount rate is 15%. Using straight-line depreciation method: 1. Calculate the accounting break-even point in number of units, what is the degree of operating leverage at the accounting break-even point 2. Calculate the OCF, NPV 3. Calculate the financial break-even point in number of units
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started