Question
You are considering a new product launch. The project will cost $1,195,000, have a four-year life, and have no salvage value; depreciation is straight-line to
You are considering a new product launch. The project will cost $1,195,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 210 units per year; price per unit will be $17,500, variable cost per unit will be $10,600, and fixed costs will be $560,000 per year. The required return on the project is 12 percent. You think the unit sales, variable cost, and fixed cost projections given here are probably accurate within +/- 10 percent. What is the cash break-even of output for this project (ignoring taxes)?
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