Question
Tom is evaluating a project that costs $1,000,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
Tom is evaluating a project that costs $1,000,000, has a four-year life, and has no salvage value.
Assume that depreciation is straight-line to
zero over the life of the project. Sales are projected at 80,000 units per year, price per unit is $65, variable cost per unit is $25, and fixed costs are $2.5 million per year. The tax rate is 21%, and the required rate of return on the project is 10%.
calculate the finanical break even number of units for the project (round to two decimals)
calculate the equivlant annual cost of the machine (round to two decimals)
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