1. Roomist Inc. is considering a new product launch. The project will cost $900,000 have a six-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 40,000 units per year; price per unit will be $70, variable costs per unit will be $30 and fixed costs will be $300,000 per year. The required return on the project is 15 percent, and tax rate = 0% (i.e., ignore taxes).
   1. What is the accounting break-even level of output for this project?
   2. Find the firms operating cash flow (OCF) if the firm just breaks-even on an accounting basis (that is, at Q = accounting break-even level).
   3. How many units, at a minimum, must Roomist sell before the projects OCF becomes negative?
   4. How many units, at a minimum, must Roomist sell before the projects NPV becomes negative?
   5. What if the marketing department of Roomist reports the annual expected sales of 12,000 units. Shall Roomist accept this project? Why? Calculate NPV and IRR at this sales level of 12,000 units.