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%. (For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.) a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%?
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%. (For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.) a. What is the accounting break-even level of sales if the firm pays no taxes? b. What is the NPV break-even level of sales if the firm pays no taxes? c. What is the accounting break-even level of sales if the firm's tax rate is 40%? d. What is the NPV break-even level of sales if the firm's tax rate is 40%?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![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%.
(For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.)
a. What is the accounting break-even level of sales if the firm pays no taxes?
b. What is the NPV break-even level of sales if the firm pays no taxes?
c. What is the accounting break-even level of sales if the firm's tax rate is 40%?
d. What is the NPV break-even level of sales if the firm's tax rate is 40%?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc854977-247c-4b9e-9268-c126a47bba78%2Fa54e5d3b-5b1f-4770-a062-3cc5f0d1670a%2Fcw9g6h.png&w=3840&q=75)
Transcribed Image Text: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%.
(For all the requirements, do not round Intermedlate calculations. Round your answer to the nearest whole number.)
a. What is the accounting break-even level of sales if the firm pays no taxes?
b. What is the NPV break-even level of sales if the firm pays no taxes?
c. What is the accounting break-even level of sales if the firm's tax rate is 40%?
d. What is the NPV break-even level of sales if the firm's tax rate is 40%?
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