Hello,

I saw the resolution in this homework https://www.coursehero.com/tutors-problems/Managerial-Accounting/20027310-How-to-Calculate-the-Break-even-and-quantities-for-the-product-lines/

However, in question 2, there are 2 things that I do not quite agree with the resolution.

1. Why the cost of capital (8%) is used as the discount rate but not the required rate of return?
2. In the direct fixed costs, I wonder if it already included the depreciation for the equipment. If so, the depreciation per year ($30k) should be excluded and leave the direct fixed costs value of $219k/ year in the NPV calculation.

Please advise.

Thank you,

Van