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show work 2. Break-Even Analysis (5 points) A project requires an initial investment of $1,000,000 and is depreciated straight-line to zero salvage over its 10-year
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2. Break-Even Analysis (5 points) A project requires an initial investment of $1,000,000 and is depreciated straight-line to zero salvage over its 10-year life. The project produces items that sell for $1,000 each, with variable costs of $700 per unit. Fixed costs are $350,000 per year. a) What is the accounting break-even quantity? Q = (FC + D)/(P-v) b) What is the operating cash flow (OCF) at accounting break-even quantity? OCF=[PQ - VQ-FC-D] +D c) What is the cash break-even quantity? Q=(FC + OCF)/(P-v); where OCF=0 d) What is the financial break-even quantity if the interest rate is 10%? Find OCF where NPV = 0 Q = (OCF + FC)/(P-v) O Show all work as follows: Identify: FC = Fixed Cost D=Depreciation P= Price v=variable cost per unit OCF = operating cash flow (if needed) Then compute the break-even quantities (Q) using the corresponding formulaStep by Step Solution
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