You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information:

The discount rate for the company is 13 percent, the initial investment in equipment is $385,000, and the project€™s economic life is seven years. Assume the equipment is depreciated on a straight-line basis over the project€™s life.

a. What is the accounting break-even level for the project?

b. What is the financial break-even level for the project?

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Sales price per abalone Variable costs per abalone Fixed costs per year Depreciation per year Tax rate $8.75 $1.23 -$430,000 $55,000 35%