You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information:
Sales price per abalone = $35.20
Variable costs per abalone = $6.30
Fixed costs per year = $377,000
Depreciation per year = $122,000
Tax rate = 34%
The discount rate for the company is 13 percent, the initial investment in equipment is $732,000, and the project’s economic life is six years. Assume the equipment is depreciated on a straight-line basis over the project’s life.
What is the financial break-even level for the project?