12. Break-even analysis (S10.2) Modern Artifacts can produce keepsakes that will be sold for

$80 each. Non-depreciation fixed costs are $1,000 per year, and variable costs are $60 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of five years to a final value of zero, and the discount rate is 10%.

a. What is the accounting break-even level of sales if the firm pays no taxes?

b. What is the NPV break-even level of sales if the firm pays no taxes?

c. What is the accounting break-even level of sales if the firm’s tax rate is 20%?

d. What is the NPV break-even level of sales if the firm’s tax rate is 20%?

e. What is the degree of operating leverage?