We are evaluating a project that costs $837,434, has an eight-year life, and has no salvage value.
Question:
We are evaluating a project that costs $837,434, has an eight-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 56,652 units per year. Price per unit is $39, variable cost per unit is $19, and fixed costs are $421,397 per year. The tax rate is 35%, and we require a return of 21% on this project.
Calculate the Accounting Break-Even Point.
We are evaluating a project that costs $841,485, has an eight-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 63,390 units per year. Price per unit is $39, variable cost per unit is $16, and fixed costs are $416,647 per year. The tax rate is 35%, and we require a return of 19% on this project.
Calculate the Financial Break-Even Point.
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford