A cell phone manufacturers cost of capital is 11% and the initial investment in a...
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| A cell phone manufacturers cost of capital is 11% and the initial investment in a project manufacturing a new phone model is $250 million. This investment will be depreciated straight-line over the 7 year life of the phone. The firms tax rate is 21%. Each unit-price of $1,000. Variable costs are $200 per unit, while fixed costs are $200 million.
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| ***Economic Breakeven: Convert your operating cashflows to unit sales dependency, and solve for the number of units where the NPV = 0 |
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