Question: We are evaluating a project that costs $252,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over

We are evaluating a project that costs $252,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 7,400 units per year. Price per unit is $59, variable cost per unit is $13, and fixed costs are $214,000 per year. Ignore the effect of taxes. We require a return of 10 percent on this project.

What is the DOL at the financial break-even point?

3.69

3.52

2.71

3.28

4.13

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