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A project requiresan initial investment of $1,000,000 and is depreciatedstraight-line to zero salvage over its 10-year life. The projectproduces items that sell for $1,000 each, with variable costs of$700 per unit. Fixed costs are $350,000 per year.1)What is theaccountingbreak-even quantity? What is theoperatingcash flow ataccounting break-even? What is degree of operating leverage(DOL) at that outputlevel?Andwhat does the DOL indicate?2)What is the cashflow break-even quantity? What is the operating cash flow at thislevel of quantity?3)What is thefinancial break-even quantity assuming the required rate of returnis 10%? What is the DOL at that output level?
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