GIPTA is planning to create agendas for 2022 which will be sold for $100 per unit. The production requires an initial investment of $2,000 which will be depreciated straight-line during its 5-year useful life to a final value of zero. Production fixed costs are assumed to be $1,800 and have no depreciation; and the variable costs are predicted to be $45 per agenda.

Assume that the discount rate is 12%.

(For all the requirements, do not round intermediate calculations. Round your answer to the nearest whole number.)

a. Calculate the accounting break-even level of sales. Assume that GIPTA pays no taxes.

b. Calculate the NPV break-even level of sales. Assume that GIPTA pays no taxes.

c. Calculate the accounting break-even level of sales. Assume that GIPTA pays 20% tax.

d. Calculate the NPV break-even level of sales. Assume that GIPTA pays 20% tax.

Answer rating: 100% (QA)

To calculate the breakeven level of sales we need to find the point at which the total revenue equals the total cost Well calculate both the accountin... View the full answer