Operating leverage at accounting break-even point

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Reference no: EM132065258

You are considering a new product launch. The project will cost $1,500,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 160 units per year; price per unit will be $18,000, variable cost per unit will be $10,500, and fixed costs will be $450,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 30 percent. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. What is the degree of operating leverage at the accounting break-even point. I have posted this question before but the answers to these two questions were wrong, please help me get the correct answer.

Reference no: EM132065258

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