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My Company sells parts for $200 each. Fixed costs are $4,500 per year and variable costs are $120 per unit. If the initial investment is
My Company sells parts for $200 each. Fixed costs are $4,500 per year and variable costs are $120 per unit. If the initial investment is $20,000 and is expected to last for 12 years and the firm pays 40% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 12 years to a final value of zero, and the discount rate is 12%.
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