MBC Corporation is considering investing in a new project. The project has a life of 10 years requires an initial investment of $180,000. The fixed operating cost is expected to be $36,000 and variable cost is expected to be 40% of sales. The required rate of return is 11%.
a) How much annual sales the project must produce to reach NPV break-even?
b) How much annual sales the project must produce to reach cash flow break-even?
c) Redo part (a) assuming there is a net salvage value of $18,000 at the end of the project's life.© BrainMass Inc. brainmass.com March 4, 2021, 10:28 pm ad1c9bdddf
Fixed operating cost=$36,000
Variable operating cost=40% of sales
Life of the ...
The expert examines project sales to reach the NPV break even and cash flow break even.