Given the following information, calculate the present value break-even point. Fixed costs: $2000/year. (Initial investment $2000).
Variable costs: $6/unit.
Depreciation: $250/year.
Price: $20/unit.
Discount rate: 10%.
Project life: 4 years.
Tax rate: 34%.
A) 100 units/year.
B) 143 units/year.
C) 202 units/year.
D) 286 units/year.

Question

Quizplus · Accepted Answer

The present value break-even point is calculated by finding the number of units where the present value of cash inflows equals the present value of cash outflows. Considering fixed costs, variable costs, depreciation, tax rate, and discount rate, the calculation results in approximately 202 units/year.

Given the Following Information, Calculate the Present Value Break-Even Point