C&C [4]

The C&C company recently installed a new bottling machine. The machine's initial cost is 2000, and can be depreciated on a straight-line basis to a zero salvage in 5 years. The machine's per year fixed cost is 1500, and its variable cost is 0.50 per unit. The selling price per unit is 1.50. C&C's tax rate is 34%, and it uses a 16%

discount rate.

1. Calculate the machine's accounting break-even point on the new machine (i.e., the production rate such that the accounting profits are zero).

2. Calculate the machine's present value break-even point(i.e., the production rate such that the NPV is zero).