Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2,900
Question:
Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $2,900 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 14%. |
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.) |
Acounting break-even level of sales | units |
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.) |
NPV break-even level of sales | units |
c. | What is the accounting break-even level of sales if the firm’s tax rate is 40%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
Acounting break-even level of sales | units |
d. | What is the NPV break-even level of sales if the firm’s tax rate is 40%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
NPV break-even level of sales | units |
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus