Question: A project has the following estimated data: price = $26 per unit; variable costs $18 per unit; fixed costs = $195,000; required return - 12%;

A project has the following estimated data: price = $26 per unit; variable costs $18 per unit; fixed costs = $195,000; required return - 12%; initial fixed assets investment - $475,000; straight line depreciation to zero over the four-year life; zero salvage value. Number units sold - 84,000. (5 marks) a. Ignoring the effect of taxes, what is the accounting break-even quantity? (1 mark) b. What is the cash break even quantity? (1 mark) c. What is the financial break-even quantity (2 marks) d. If the OCF at 84,000 units is $358,250, what is degree of operating leverage and what does this number tell you? (1 mark)

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