The total investment needed to undertake the project is $5,000,000. This amount will be depreciated straight-line to zero over the 5-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a required return of 20 percenton new projects.

Q =FC +OCFT

C

D

1T

C

Pv

Q =

FC +

OCF

T

C

D

1

T

C

P

v

Use the above expression to find the cash, accounting, and financial break-even points for Wettway Sailboat. Assume a tax rate of 25 percent.

1)cash break even? 2) accounting break even? 3) financial break even?