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A cell phone manufacturers cost of capital is 11% and the initial investment in a...

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Finance

A cell phone manufacturers cost of capital is 11% and the initial investment in a project manufacturing a new phone model is $250 million.

This investment will be depreciated straight-line over the 7 year life of the phone.

The firms tax rate is 21%. Each unit-price of $1,000. Variable costs are $200 per unit, while fixed costs are $200 million.
***Economic Breakeven: Convert your operating cashflows to unit sales dependency, and solve for the number of units where the NPV = 0

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