We are evaluating a project that costs $$820,000,$ has a life of $7$ years, and has no salvage value. Assume that depreciation is straight$-$line to zero over the life of the project. Sales are projected at $159,000$ units per year. Price per unit is $$43,$ variable cost per unit is $$28,$ and fixed costs are $$833,120$ per year. The tax rate is $25$ percent, and we require a return of $14$ percent on this project.

$1$a$.$ Calculate the accounting break$-$even point.

Break$-$even point

$1$b$.$ What is the degree of operating leverage at the accounting break$-$even point?

DOL

$2$a$.$ Calculate the base$-$case cash flow.

Cash flow