Accounting-financial break-even points for wettway sailboat

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Reference no: EM132064326

Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $34,000 per boat. The variable costs will be about half that, or $17,000 per boat, and fixed costs will be $550,000 per year.

The Base Case: The total investment needed to undertake the project is $2,700,000. This amount will be depreciated straight-line to zero over the five-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Wettway has a 20 percent required return on new projects.

Q=FC+(OCF-1*D/(1-T))/P-V

Use the above expression to find cash, accounting and financial break-even points for Wettway Sailboat. Assume a tax rate of 38 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) please show me work.

Reference no: EM132064326

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