Question
Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $1,400 per year, and variable costs are $30 per
Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $1,400 per year, and variable costs are $30 per unit. The initial investment of $5,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 12%.
(For all the requirements, do not round intermediate calculations. Round your answer to the nearest whole number.)
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%?
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