Answer:
18,119 units
Step-by-step explanation:
Break even Point is the level of activity at which the the project makes neither a profit nor loss.
Break even Point = (Annual fixed costs of a project + Annual equivalent cost of the project) ÷ Contribution per unit
where,
Annual fixed costs of a project = $39,800
Step 1 : Calculate PMT
This is to account for additional fixed costs on initial investment that needs to be covered.
N = 3
I = 15 %
PV = $148,000
FV = $0
PMT = ?
Using a Financial calculator, the PMT is $225,090
Step 2: Calculate Break Even Point
Break even Point = ($39,800 + $225,090) ÷ $14.62
= 18,119 units
Conclusion
The present value break-even point in units per year is 18,119 units