Consider a project with the following data: accounting break-even quantity = 29,000 units; cash break-even quantity = 16,250 units; life = 10 years; fixed costs = $203,000; variable costs = $24 per unit; required return = 14 percent; depreciation = straight line.Ignoring the effect of taxes,what is the financial break-even quantity?
A)38,723 units
B)39,201 units
C)39,458 units
D)39,624 units
E)40,693 units

Question

Quizplus · Accepted Answer

16,250 = $203,000/(P - $24); P = $36.492307729,000 = ($203,000 + D)/($36.4923077 - $24); D = $159,276.923Initial investment = 10 × $159,276.923 = $1,592,769.23 Q_F = ($203,000 + $305,355.43)/($36.4923077 - $24) = 40,693.47 units

Consider a Project with the Following Data: Accounting Break-Even Quantity