PT Kolam Makara has a project costs $900,000, has a five-year life, and has a salvage value of $130,000. Depreciation is straight-line to zero. The required return is 14% and tax rate is 34%. Sales are projected at 2350 units per year. Price per unit is $400. Variable cost per unit is $200 and fixed costs are $150,000 per year. It is known that the depreciation expense is $180,000 per year. The engineering department estimates you will need an initial net working capital investment of $50,000. Given the base-case projections in the previous problem, what are the cash, accounting, and financial break-even sales levels for this project?
Use the following base case information to evaluate the project:
PT Kolam Makara has a project costs $900,000, has a five-year life, and has a salvage value of $130,000.
Given the base-case projections in the previous problem, what are the cash, accounting, and financial break-even sales levels for this project?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 4 images
