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

Sales price per abalone
$2.00 Variable costs per abalone
$.72 Fixed costs per year
$340,000 Depreciation per year
$20,000 Tax rate
35%

The discount rate for the company is 15 percent, the initial investment in equipment is

$140,000, and the project’s economic life is seven years. Assume 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? LO.1