Question: Consider a project with a 6-year life. The initial cost to set up the project is $450,000. This amount is to be linearly depreciated to

Consider a project with a 6-year life. The initial cost to set up the project is $450,000. This amount is to be linearly depreciated to zero over the life of the project. The firm expects to be able to sell the equipment for $90,000 after 6 years.

The price per unit is $380, variable costs are $304 per unit and fixed costs are $45,000 per year. The project has a required return of 12% and a tax rate of 28%.

How many units must be sold per year for the project to achieve financial break-even?

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