Question: A project has an initial investment of $3.5 million, which will be straight-line depreciated to zero over five years (which is the life of the project). Each year there are $450,000 in fixed costs. The price per unit is $75 of which $35 are variable costs. The appropriate discount rate for this project is 17.3%, and the tax rate is 34%.
a. Find the accounting breakeven point in terms of revenue and number of units sold per period
b. Find the financial breakeven point in terms of revenue and number of units sold per period