Question: You are asked to evaluate a project which requires the purchase of an asset and you must determine the break-even level of the cost of

You are asked to evaluate a project which requires the purchase of an asset and you must determine the break-even level of the cost of the asset. The asset will be depreciated straight-line over its life and will have zero salvage value at the end of the project. The life of the project and asset are both 7 years. The net working capital will increase by $28,000 at the beginning of the project but this can be fully recovered when the project ends. The firm's tax rate is 38% and its discount rate is 11.5%. Revenue is expected to be $160,000 per year and costs are expected to be 65% of revenue. What is the break-even level of the cost of the asset? Please make sure to use this NPV formula to solve the question: NPV= PV(OCF)+PV(ECF)+PV(TAX SHEILD)-Co

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