Problem:
L.J.'s Toys Inc. just purchased a $405,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $25. The variable cost per toy is $11, and the firm incurs fixed costs of $283,000 each year. The corporate tax rate for the company is 34 percent. The appropriate discount rate is 12 percent.
Required:
Question: What is the financial break-even point for the project?
Note: Please explain comprehensively and give step by step solution.