We are discussing the break even analysis and the NPV break even. I have this so far and not sure how to calculate the information:
Sales
15.5 million
Variable costs
8 million
Fixed costs
150 million
Depreciation
40%
Capital
10%
Break even levels of revenues= fixed costs including depreciation 150 X .40= 60
Additional profit from each additional dollar of sales
This is the question: I just need to know if the formula is correct, I am sure I am missing pieces to the formula and how to calculate. Perhaps I just need the correct formula. thank you
Determine the number of planes that the company must produce in order to break even, on both accounting basis and NPV basis: the project initial investment is $900 million, each plane sold for $15.5 million, the variable cost is $8 million each plane, the fixed cost is $150 million, the depreciation uses straight-line method, tax rate is 40% and the company's cost of capital is 10%.