Calculate the accounting break-even point

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We are evaluating a project that costs $650,000, has a five-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 47,000 units per year. Price per unit is $56, variable cost per unit is $26, and fixed costs are $845,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project.

Calculate the accounting break-even point

Calculate the base-case cash flow and NPV

What is the sensitivity of NPV to changes in the sales figure

Calculate the change in NPV if sales were to drop by 500 units

What is the sensitivity of OCF to changes in the variable cost figure

Reference no: EM132485080

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