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Your firm is currently evaluating a 10-year project and you have been given the responsibility to conduct a break even analysis for this project. The
Your firm is currently evaluating a 10-year project and you have been given the responsibility to conduct a break even analysis for this project. The fixed cost for this project is $178,000 and variable costs is $18.40 per unit. You have been told that the cash break even quantity for the project is 17,120 units and the accounting break even quantity is 28,700 units. Depreciation is straight-line to zero over the project life. Ignoring taxes, if the required rate of return is 14% what is the financial break-even quantity?
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