Reference no: EM133175831

1. Given the forecasted data, determine the number of planes that the company must produce in order to break even, on both an accounting basis and an NPV basis.  The 15-year project initial investment is $1,200 million, each plane sold for $15 million, the variable cost is $8 million for each plane, the fixed cost is $100 million, the depreciation uses straight-line method, the tax rate is 35% and the company's cost of capital is 10%. Please calculate accounting break-even and economic break-even for the project.

2. Calculate the mean and standard deviation for the following asset.

Economic State                      Return                        Probability

Recession                                -25%                           25%

Normal                                    15%                             45%

Boom                                      35%                             30%