Question
Modern Artifacts can produce keepsakes that will be sold for $60 each. Non-depreciation fixed costs are $2,200 per year, and variable costs are $30 per
Modern Artifacts can produce keepsakes that will be sold for $60 each. Non-depreciation fixed costs are $2,200 per year, and variable costs are $30 per unit. The initial investment of $4,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 14%.
| a. | What is the accounting break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| Acounting break-even level of sales | units |
| b. | What is the NPV break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| NPV break-even level of sales | units |
| c. | What is the accounting break-even level of sales if the firms tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| Accounting break-even level of sales | units |
| d. | What is the NPV break-even level of sales if the firms tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| NPV break-even level of sales | units |
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Focus On Personal Finance An Active Approach To Help You Develop Successful Financial Skills
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
4th Edition
0078034787, 978-0078034787
