Calculate the npv breakeven annual cash flow for project

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A 10-year steel pipe-producing project requires $66 million in upfront investment (all in depreciable assets). The expected price per pipe is $64 and the variable cost is $24 per widget. The fixed costs excluding depreciation are expected to be $14 million per year for ten years. The upfront investment will be depreciated on a straight line basis for the 10-year useful life of the project to $6 million book value. The expected salvage value of the assets is $14 million. The tax rate is 25% and the WACC applicable to the project is 14%.

a. Calculate the NPV breakeven annual cash flow for the project.

b. Calculate the NPV break-even point

Reference no: EM132566097

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