How do I get the 1,598,889?

A 7 . A123. r ange Ok stiles Drawing . stupe lects Co to St 2 Select Editing Paragraph EXAMPLE A new product requires an initial investment of $5 million and will be depreciated to an expected salvage of zero over 5 years . The price of the new product is expected to be $25,000, and the variable cost per unit is $15,000 The fixed cost is $1 million . What is the accounting break-even point each year? 11-15 Copyrir 2016 M. Gr . Global duration LLC. All rights reserved DELL Do not Adjust Monitor Pind lot DOD O AL13 Inge Select EXAMPLE: BREAK-EVEN ANALYSIS . Consider the previous example Assume a required return of 18% Accounting break-even = 200 . Cash break-even = 100 (ignoring taxes) - What is the financial break-even point (ignoring taxes)? What OCF (or payment) makes NPV = 0% - CF = 1.598.889 . Q = (1.000.000 + 1,598,889) / 125.000 - 15,000) = 260 units (ignoring taxes) The question now becomes: Can we sell at least 260 units per year? C 2 016 by Grow Global Education LLC. Alisen DELL