ABC Inc. is considering a new electric car project that will last for five years. It requires an initial investment of $200,000,000. The cars are expected to be sold at a price of $40,000 each. The variable cost per car is $20,000, and the fixed cost per year is $100,000. Assume that revenues and costs occur at the end of each year. The appropriate discount rate is 12% p.a. Ignoring income taxes and depreciation, what is the break-even level of sales?

Answer rating: 100% (QA)

To find the breakeven level of sales we need to determine the number of units that need to be sold f... View the full answer