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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 Preview

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

    Solution Summary

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