Question
Financial Break-even Analysis: You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information Sales price per
Financial Break-even Analysis: You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information
Sales price per abalone = $35
Variable costs per abalone = $6.10
Fixed costs per year = $375,000
Depreciation per year = $120,000
Tax Rate = $35%
The discount rate for the company is 15%, the initial investment in equipment is $840,000, and the projects economic life is 7 years. Assume the equipment is depreciated on a straight-line basis over the projects life.
What is the accounting break-even level for the project?
What is the financial break-even level for the project?
Please use the BA II calculator when applicable and show inputs please.
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