Lee Inc. purchases a digital color printer for $280,000 to launch its 5-year publishing project. 

(11%)  This printer will be fully depreciated by the straight-line method over its 7-year economic life, and will be sold for$60,000 at the termination of the 5-year project.  The variable costs are $26 per copy, and annual fixed costs are $80,000.  The unit selling price of the book is $32.  The marginal tax rate is 35%, the inflation rate is 3%, and the discount rate is 14%.  This project requires an initial net working capital requirement of $50,000 that can be fully recovered at the termination of the project. 

            (a) Compute the annual operating cash flowfor this 5-year publishing project to break even in valuation, i.e., OCF_BE.

            (b) Use your answer for OCF_BE in part (a) to compute the minimum number of copies needed to be sold annually for this 5-year publishing project to break even in valuation