Intro

Consider a project with a $5-$year life and no salvage value. The initial cost to set up the project is $$100,000.$ This amount is to be linearly depreciated to zero over the life of the project.

The price per unit is $$90,$ variable costs are $$72$ per unit and fixed costs are $$10,000$ per year. The project has a required return of $11\%.$ Ignore taxes.

Part $1$

Attempt $\frac{1}{6}$ for $10$ pts$.$

How many units must be sold for the project to achieve accounting break$-$even?

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Part $2$

Attempt $\frac{1}{6}$ for $10$ pts$.$

How many units must be sold for the project to achieve cash break$-$even?

Part $3$

Attempt $\frac{1}{6}$ for $10$ pts$.$

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

Part $4$

Attempt $\frac{1}{6}$ for $10$ pts$.$

What is the degree of operating leverage at the financial break$-$even?