Calculate the accounting break-even point

Reference no: EM132042766

Question: Please make the answer clear as in B. followed by the answer at the end.

We are evaluating a project that costs $848,000, 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 62,000 units per year. Price per unit is $40, variable cost per unit is $20, and fixed costs are $625,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project.

a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Break-even point units

b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)

Cash flow $

NPV $

b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

NPV/Q $

c. What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

OCF/VC $

Reference no: EM132042766

Questions Cloud

What is the requried rate of return on a stock : What is the requried rate of return on a stock with a 0.5 expected dividend and a 25 price with 8% growth? What is the growth rate of the stock with.

Some of the common assumptions about action : How can a character within a film challenge conventional action film as well as some of the common assumptions about action?

How can personal computer users protect their pii : Using the Internet, research methods you think corporations can use to protect themselves and their customers from security breaches involving PII.

National memorial for peace and justice : What does the National Memorial for Peace and Justice stands for?

Calculate the accounting break-even point : Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

What value does the asset have to the organization : Who is likely to attack the system? What are they likely to attack to accomplish their goal?What value does the asset have to the organization?

Explain the federal budget process in federal accounting : Question - Explain the federal budget process in federal accounting and financial reporting. Explain the federal budget process

Great migration of african american from the south : When did the Great Migration of African American from the South take place?

Review problem related to the business : Self-defense is big business, especially in urban areas. Self-defense has become one of the leading service business opportunities for entrepreneurs in the US.

User Account

All Pages