Opens new product line and requires initial outlay

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1. A company is considering a 5-year project that opens a new product line and requires an initial outlay of $78,000. The assumed selling price is $97 per unit, and the variable cost is $56 per unit. Fixed costs not including depreciation are $21,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 12% per year, what is the accounting break-even point? (Answer to the nearest whole unit.)

2. A company is considering a 5-year project that opens a new product line and requires an initial outlay of $78,000. The assumed selling price is $91 per unit, and the variable cost is $58 per unit. Fixed costs not including depreciation are $17,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 11% per year, what is the financial break-even point? (Answer to the nearest whole unit.)

Reference no: EM131087788

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