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A project has the following estimated data: price = $82 per unit; variable costs = $41 per unit; fixed costs = $7,200; required return = 11 percent; initial investment = $7,000; life = seven years. Ignore the effect of taxes.

Required:

(a) What is the accounting break-even quantity? (Do not round your intermediate calculations.)

(b) What is the cash break-even quantity? (Do not round your intermediate calculations.)

(c) What is the financial break-even quantity? (Do not round your intermediate calculations.)

(d) What is the degree of operating leverage at the financial break-even level of output? (Do not round your intermediate calculations.)

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92715423

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