# Break even

A company is considering an investment that costs $785, 000 and has a salvage value in ten years of $137, 714, but the company is not sure how much net annual cash inflow will be provided by the investment. The company has a discount rate of 70%. Compute the net amount of annual cash flow required to break even.

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#### Solution Preview

Note: the abbreviations have the following meanings

PVIF= Present Value Interest Factor

PVIFA= Present Value Interest Factor for an Annuity

They can be read from tables or calculated using the following equations

PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%

PVIF( n, ...

#### Solution Summary

Computes the net amount of annual cash flow required to break even.

$2.19