A project requires an initial investment of $1,000,000 and is depreciated straight-line to zero salvage over its...

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A project requiresan initial investment of $1,000,000 and is depreciatedstraight-line to zero salvage over its 10-year life. The projectproduces items that sell for $1,000 each, with variable costs of$700 per unit. Fixed costs are $350,000 per year.
1)What is theaccountingbreak-even quantity? What is theoperatingcash flow ataccounting break-even? What is degree of operating leverage(DOL) at that outputlevel?Andwhat does the DOL indicate?
2)What is the cashflow break-even quantity? What is the operating cash flow at thislevel of quantity?
3)What is thefinancial break-even quantity assuming the required rate of returnis 10%? What is the DOL at that output level?

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Given information Initial investment 1000000 Salvage value 0 Number of life 10 years Selling price p 1000 Variable cost v 700 Fixed cost FC 350000 See Answer

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A project requiresan initial investment of $1,000,000 and is depreciatedstraight-line to zero salvage over its 10-year life. The projectproduces items that sell for $1,000 each, with variable costs of$700 per unit. Fixed costs are $350,000 per year.1)What is theaccountingbreak-even quantity? What is theoperatingcash flow ataccounting break-even? What is degree of operating leverage(DOL) at that outputlevel?Andwhat does the DOL indicate?2)What is the cashflow break-even quantity? What is the operating cash flow at thislevel of quantity?3)What is thefinancial break-even quantity assuming the required rate of returnis 10%? What is the DOL at that output level?