Question: A project has the following estimated data: price = $65 per unit; variable costs = $33 per unit; fixed costs = $4,000; required return =

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?

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