Needed help with number 12. Thanks!

12. Return to the initial inflation assumptions (5 percent on price and 2 percent on cash operating costs).

a. Assume that the sales quantity estimate remains at 425,000 units per year. What Year 0 unit price would the company have to set to cause the project to just break even?

b. Now assume that the sales price remains at $2. What annual unit sales volume would be needed for the project to break even?

TABLE 1 Project Cash Flow Estimates Depreciation Schedule: Basis = Net Investment Outlay: Price Freight Installation Change in NWC MACRS Factor 33% Deprec. Expense $188,100 End-of-Year Book Value $381,900 WN- 39.900 100% Year 2 Year 1 $ 2 425,000 $850,000 637,500 188,100 20,000 Year 4 $ 2 425,000 $850,000 637,500 39.900 20,000 $ 4,400 $152,600 Cash Flow Statements: Year o Unit price Unit sales Revenues Operating costs Depreciation Other project effects Before tax income Taxes Net income Plus depreciation Net op cash flow Salvage value SV tax Recovery of NWC Termination CF Project NCF 1.760 $ 2,640 188,100 $190,740 61.040 $91,560 39,900 $131,460 $100,000 TABLE 1 Project Cash Flow Estimates Depreciation Schedule: Basis = Net Investment Outlay: Price Freight Installation Change in NWC MACRS Factor 33% Deprec. Expense $188,100 End-of-Year Book Value $381,900 WN- 39.900 100% Year 2 Year 1 $ 2 425,000 $850,000 637,500 188,100 20,000 Year 4 $ 2 425,000 $850,000 637,500 39.900 20,000 $ 4,400 $152,600 Cash Flow Statements: Year o Unit price Unit sales Revenues Operating costs Depreciation Other project effects Before tax income Taxes Net income Plus depreciation Net op cash flow Salvage value SV tax Recovery of NWC Termination CF Project NCF 1.760 $ 2,640 188,100 $190,740 61.040 $91,560 39,900 $131,460 $100,000