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A four year project costs $1.7 million and has straight-line depreciation. Sales of 190 units per year are projected, with a unit sales price of $18,000. Variable costs per unit are $11,200, and fixed costs are $410,000 per year. The required return is 12%, and the tax rate is 35%.

a. What is the cash break-even level of output (ignoring taxes)?

b. What is the accounting break-even level of output?

c. What is the degree of operating leverage at the accounting break-even point?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9872102

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