Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Modern Artifacts can produce keepsakes that will be sold for $ 6 0 each. Nondepreciation fixed costs are $ 3 , 0 0 0 per

Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $3,000 per year, and variable costs are $30 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.
Note: For all the requirements, do not round intermediate calculations. Round your answer up to the nearest whole unit.
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 30%?
d. What is the NPV break-even level of sales if the firm's tax rate is 30%?
\table[[a. Acounting break-even level of sales,,units],[b. NPV break-even level of sales,,units],[c. Acounting break-even level of sales,,units],[d. NPV break-even level of sales,,units]]
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions