Otobai is considering still another production method for its electric scooter. It would require an investment of 16.00 billion in addition to the initial investment of 16.00 billion but would reduce variable costs by 60,000 per unit. The cost of capital was assumed to be 17%. The total investment can be depreciated on a straight-line basis over the 10-year period, and profits are taxed at a rate of 50%.

Consider the following estimates for the scooter project.

Market size 1.20 million

Market share .1

Unit price 475,000.0

Unit variable cost 400,000.0

Fixed cost 3.20 billion

Assume investment is depreciated over 10 years straight-line and income is taxed at a rate of 50%.

a. What is the NPV of this alternative scheme? (Do not round intermediate calculations. Enter your answer in billions. Round your answer to 2 decimal places.) Net present value billion

b. Calculate the break-even point. (Do not round intermediate calculations. Round "PV Factor" to 6 decimal places and the final answer to the nearest whole number.) Break-even point

c. Consider the following Preliminary cash-flow forecasts for Otobais electric scooter project (figures in billions). Calculate the variable cost per year at which the electric scooter project would break even. Assume that the initial investment is 16.00 billion. Investment is depreciated over 10 years straight-line and income is taxed at a rate of 50%. Use Table 10.1. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

What is the variable cost per year?

Calculate the DOL. Consider fixed cost assuming the additional investment of 16.00 billion. (Do not round intermediate calculations. Round your answer to 2 decimal places.)