Modern Artifacts can produce memorabilia that will sell for $80 each. Fixed costs without depreciation are $1,100
Question:
Modern Artifacts can produce memorabilia that will sell for $80 each. Fixed costs without depreciation are $1,100 per year and variable costs are $60 per unit. The initial investment of $4,000 will be depreciated on a straight-line basis to its zero final value over its 5-year useful life and the discount rate is 12%.
A. If the firm pays no taxes, what is the accounting breakeven level of sales? (Do not round up the interim accounts. Round your answer to the nearest whole number.) The account breakeven level answer is 95.
B. If the firm pays no taxes, what is the NPV break-even level of sales? (Do not round up intermediate calculations. Round your answer to the nearest whole number.) Break-even level of NPV sales units
C. If the firm's tax rate is 40%, what is the accounting breakeven level of sales? (Do not round up the interim accounts. Round your answer to the nearest whole number.) The account breakeven level answer is 95.
D. If the firm's tax rate is 40%, what is the NPV break-even level of sales? (Do not round up intermediate calculations. Round your answer to the nearest whole number.) Break-even level of NPV sales units
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus