You are considering the following information: Sales price per abalone = $34.70 Variable costs per abalone = $5.80 Fixed costs per year = $372,000 Depreciation per year = $117,000 Tax rate = 40%
The discount rate for the company is 14 percent, the initial investment in equipment is $936,000, and the project’s economic life is eight 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?