A project has the following estimated data: price = $65 per unit; variable costs = $33 per
Question:
A project has the following estimated data: price = $65 per unit; variable costs = $33 per unit; fixed costs = $4,000; required return = 16%; initial investment = $9,000; life = three years.
Ignore the effect of taxes and assume straight-line depreciation to zero.
a. What is the accounting break-even quantity?
b. What is the cash break-even quantity?
c. What is the financial break-even quantity?
d. What is the degree of operating leverage at the financial break-even level of output?
Step by Step Answer:
A Computation of the accounting breakeven quantity B Computation of the cash breakeven quant...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
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