Problem:
A project has the following estimated data: price = $66 per unit; variable costs = $43 per unit; fixed costs = $16,500; required return = 8 percent; initial investment = $25,000; life = five years.
Required:
Question 1: What is the accounting break-even quantity?
Question 2: What is the cash break-even quantity?
Question 3: What is the financial break-even quantity?
Question 4: What is the degree of operating leverage at the financial break-even level of output?
Note: Provide support for rationale.