A Project Requires an Initial Equipment Purchase of $480,000, Which

question 332

Multiple Choice

A project requires an initial equipment purchase of $480,000, which will be depreciated straight-line to zero over the life of the project. The equipment will have no salvage value. Annual fixed costs are projected at $266,800. The selling price per unit is $9.90 with a variable cost per unit of $6.65. The project has a 6-year life and a required rate of return of 12%. What is the accounting break-even quantity if taxes are ignored?

• A) 82,092
• B) 91,538
• C) 106,708
• D) 109,813
• E) 112,634

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