Financial Break-even Analysis You are considering investing in a company that cultivates truffles for sale to local restaurants. Use the following information:

Sales price per truffle £100.00 Variable costs per truffle £72.00 Fixed costs per year £340,000 Depreciation per year £20,000 Tax rate 35%

The discount rate for the company is 15 per cent, the initial investment in truffle-detecting equipment is £140,000, and the project’s economic life is seven years. Assume, for simplicity, that the equipment is depreciated on a straight-line basis over the project’s life.

(a) What is the accounting break-even level for the project?

(b) What is the financial break-even level for the project?