Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating project that costs $690,000, has a life of 5 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $75, variable cost per unit is $50, and fixed costs are $790,000 per year. The tax rate is 25 percent, and we require a return of 13 percent on this project.

Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $690,000, has a life of 5 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $75, variable cost per unit is $50, and fixed costs are $790.000 per year. The tax rate is 25 percent, and we require a return of 13 percent on this project. Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $690,000, has a life of 5 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $75, variable cost per unit is $50, and fixed costs are $790.000 per year. The tax rate is 25 percent, and we require a return of 13 percent on this project