Break-Even. Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,000 per year and variable costs are $60 per unit.

a. If the project requires an initial investment of $3,000 and is expected to last for 5 years and the firm pays no taxes, what are the accounting and NPV break-even levels of sales?

The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 10 percent.

b. How do your answers change if the firm’s tax rate is 40 percent?