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Question 5: (8 marks) boss asks you to evaluate a project. The project will have a life of 5 years. The project requires purchase of

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Question 5: (8 marks) boss asks you to evaluate a project. The project will have a life of 5 years. The project requires purchase of an asset. The initial cost of this asset will be depreciated straight-line over 5 years with zero salvage at the end. The net working capital will increase by $50,000 at the beginning of the project, but it can be fully recovered when the project ends. The firm's tax rate is 30% and the cost of capital is 10%. Sales revenue is expected to be $200.000 per year and costs are expected to be 60% of sales. What is the break-even level of the cost of the asset

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