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Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 units. The expected variable cost per unit is $260 and the expected
Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 units. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. The depreciation expense is $129,000. The sales price is estimated at $755 per unit. The tax rate is 35 percent. Part a. What is operating cash flow for the project? Part b. What is the accounting break-even quantity? Part c. What is the cash break-even quantity? Part d. What is the financial break-even point? (Assume that the operating cash flow calculated in part a. is the OCF where NPV is zero.)
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