Question
The leaky Cauldron is going to add butterbeer to its menu. It requires an investmnet of $500,000 in equipment, strorage units, etc. There will be
The leaky Cauldron is going to add butterbeer to its menu. It requires an investmnet of $500,000 in equipment, strorage units, etc. There will be no salvage value at the end of the 6-year project when the butterbeer fad passes. Depreciation is straight line over the life of the project. It is estimated that 100,000 pints of butterbeer will be sold each year. they will retail at $15 each. variable cost of each beer is $10. fixed costs associated with the project are $100,000 per year. the tax rate is 34% and the leaky cauldron requires 12% return. what is the accounting break even and the financial break even in units?
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