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Project sales to reach: NPV break even, cash flow break even

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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.

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Solution Summary

The expert examines project sales to reach the NPV break even and cash flow break even.

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Given that,
Initial Investment=$180,000
Fixed operating cost=$36,000
Variable operating cost=40% of sales
Life of the ...

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  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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