The Howard Sports Company is considering a new production line. The expected economic life of the project is 8 years. The project will generate sales and incur costs annually. Variable cost is 52% of sales. Total annual fixed costs, excluding depreciation, are $380,000. The initial outlay of the project is $1,264,000 and will be depreciated on a straight-line basis to zero at the end of the project (and the half-year rule does not apply). The company's tax rate is 30% and the discount rate is 9.10%. Calculate the NPV break-even level of sales. a. $3,843,229 b. $2,283,398 c. $1,473,875 d. $1,614,946 e. $1,332,803

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.