Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $3,000 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 10%. 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.) Accounting break-even level of sales: 120 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: 126 units c. What is the accounting break-even level of sales if the firm’s tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Accounting break-even level of sales: 120 units d. What is the NPV break-even level of sales if the firm’s tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) NPV break-even level of sales: 90 units? NOTE: The last one (d) was being marked as incorrect. I recalculated it several times already, giving me the same result. Could you please check?
Modern Artifacts can produce keepsakes that will be sold for $60 each. Nondepreciation fixed costs are $3,000 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 10%.
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.)
Accounting break-even level of sales: 120 units
b. What is the
NPV break-even level of sales: 126 units
c. What is the accounting break-even level of sales if the firm’s tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Accounting break-even level of sales: 120 units
d. What is the NPV break-even level of sales if the firm’s tax rate is 30%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
NPV break-even level of sales: 90 units?
NOTE: The last one (d) was being marked as incorrect. I recalculated it several times already, giving me the same result. Could you please check?
Trending now
This is a popular solution!
Step by step
Solved in 7 steps
