We are evaluating a project that costs $630,700, has a seven-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 90,000 units per year. Price per unit is $46, variable cost per unit is $33, and fixed costs are $720,000 per year. The tax rate is 25 percent, and we require a return of 10 percent on this project. a- Calculate the accounting break-even point. (Do not round intermediate 1. calculations and round your answer to the nearest whole number, e.g., 32.) a- What is the degree of operating leverage at the accounting break-even 2. point? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b- Calculate the base-case cash flow and NPV (Do not round intermediate
We are evaluating a project that costs $630,700, has a seven-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 90,000 units per year. Price per unit is $46, variable cost per unit is $33, and fixed costs are $720,000 per year. The tax rate is 25 percent, and we require a return of 10 percent on this project. a- Calculate the accounting break-even point. (Do not round intermediate 1. calculations and round your answer to the nearest whole number, e.g., 32.) a- What is the degree of operating leverage at the accounting break-even 2. point? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b- Calculate the base-case cash flow and NPV (Do not round intermediate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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