A project has the following estimated data: price = $65 per unit; variable costs = $33 per

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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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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th Edition

Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan

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Question Posted: May 23, 2013 05:18 AM

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A project has the following estimated data: price = $65 per unit; variable costs = $33 per

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A Computation of the accounting breakeven quantity B Computation of the cash breakeven quant...View the full answer

Fundamentals of Corporate Finance

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