Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $1,500 per year, and variable costs are $30 per unit. The initial investment of $2,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.   (For all the requirements, do not round intermediate 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
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Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $1,500 per year, and variable costs are $30 per unit. The initial investment of $2,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.

 

(For all the requirements, do not round intermediate 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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