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A company is considering a 5-year project that opens a new product line and requires an...

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Finance

A company is considering a 5-year project that opens a newproduct line and requires an initial outlay of $81,000. The assumedselling price is $96 per unit, and the variable cost is $62 perunit. Fixed costs not including depreciation are $22,000 per year.Assume depreciation is calculated using stright-line down to zerosalvage value. If the required rate of return is 13% per year, whatis the financial break-even point? (Answer to the nearest wholeunit.)

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Answer & Explanation Solved by verified expert
4.4 Ratings (792 Votes)
Financial breakeven point is the point at which NPV of a project is zero NPV is calculated using the following formula NPV Present value of cash inflows Initial investment Here initial investment is given as    See Answer
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