Question
GIPTA is planning to create agendas for 2022 which will be sold for $80 per unit. The production requires an initial investment of $2,000 which
GIPTA is planning to create agendas for 2022 which will be sold for $80 per unit. The production requires an initial investment of $2,000 which will be depreciated straight-line during its 5-year useful life to a final value of zero. Production fixed costs are assumed to be $1,900 and have no depreciation; and the variable costs are predicted to be $60 per agenda.
Assume that the discount rate is 10%.
(For all the requirements, do not round intermediate calculations. Round your answer to the nearest whole number.)
a. Calculate the accounting break-even level of sales. Assume that GIPTA pays no taxes.
b. Calculate the NPV break-even level of sales. Assume that GIPTA pays no taxes.
c. Calculate the accounting break-even level of sales. Assume that GIPTA pays 30% tax.
d. Calculate the NPV break-even level of sales. Assume that GIPTA pays 30% tax.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started