Assume a project has estimated fixed costs of $61,200,variable costs per unit of $84.29,a selling price of $199,and an initial cost of $402,000 for fixed assets.Depreciation is straight-line to zero over the project's 4-year life.The tax rate is 30 percent,and the discount rate is 12 percent.What is the financial breakeven point?

Question

Quizplus · Accepted Answer

$402,000 = EAC(1 - 1 / 1.12⁴)/ 0.12 EAC = $132,352.24 Financial breakeven point = [$132,352.24 + $61,200(1 - 0.30)- ($402,000 / 4)(0.30)] / [($199 - $84.29)(1 - 0.30)] = 1,806 units

Assume a Project Has Estimated Fixed Costs of $61,200,variable Costs