Question

A company hires you to determine the minimum sales figure it must post every year in order to break even after a 15-year operation. The company expects annual expenditures to be $10,000. Further, the company makes an investment in year 1 in the amount of $100,000 (with a salvageable cost of $10,000) to be depreciated over a 3-year period (years 2-4) using the sum-of-years approach. The company also expects a $200,000-investment (with a salvageable cost of $10,000) in year 6 to be depreciated over a 3-year period (years 7-9). Assume only federal taxes (21%) are to be levied. Note: DO NOT USE “INVESTMENTS” IN YOUR TAX CALCULATIONS. (hint: there’s no year 0 ).

Answer 1