Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,900 per year, and variable costs are $60 per

Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,900 per year, and variable costs are $60 per unit. The initial investment of $2,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.

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.)

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.)

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.)

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: Denise Lee

1st Edition

1948426129, 9781948426121

More Books

Students also viewed these Finance questions