Wodden Inc. is considering a new product launch. The project will cost $$1,500,000$ have a $10-$year life, and

have no salvage value; depreciation is straight$-$line to zero. Sales are projected at $10,000$ units per year; price

per unit will be $$145,$ variable costs per unit will be $$75$ 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$).$

a$.$ What is the accounting break$-$even level of output for this project?

b$.$ Find the firm's operating cash flow $($OCF$)$ if the firm just breaks$-$even on an accounting basis $($that is$,$ find

OCF where $Q$ is at accounting break$-$even level$).$

c$.$ How many units, at a minimum, must Wodden sell before the project's OCF becomes negative?

d$.$ How many units, at a minimum, must Wodden sell before the project's NPV becomes negative?

e$.$ What if the marketing department of Wodden reports the annual expected sales of $10,000$ units. Shall

Wodden accept this project? Why? Calculate NPV and IRR at this sales level of $10,000$ units.

f$.$ Calculate DOL at the sales level of $10,000$ units.

g$.$ What is the new OCF if sales or output level declines from $10,000$ units to $9,000$ units? Find new DOL.