A project has the following estimated data: price = $89 per unit; variable costs = $35.60 per unit; fixed costs = $5,900; required return = 14 percent; initial investment = $10,000; life = three years. Ignore the effect of taxes.
a. What is the accounting break-even quantity?
110
173
208
190
b. What is the cash break-even quantity?
110
173
105
88
99
c. What is the financial break-even quantity?
191
229
210
172
153
d. What is the degree of operating leverage at the financial break-even level of output?
2.3698
2.2491
1.9896
1.4705