Modern Artifacts can produce keepsakes that will be sold for $70 each. Nondepreciation fixed costs are $2,000 per year and...
Modern Artifacts can produce keepsakes that will be sold for $70 each. Nondepreciation fixed costs are $2,000 per year and variable costs are $35 per unit.
a.
If the project requires an initial investment of $4,000 and is expected to last for 5 years and the firm pays no taxes. The initial investment will be depreciated straightline over 5 years to a final value of zero, and the discount rate is 10%. What are the accounting and NPV breakeven levels of sales? (Do not round intermediate calculations. Round your answers to the nearest whole number.)
Accounting breakeven levels of sales units
NPV breakeven levels of sales units

b.
What will be the accounting and NPV breakeven levels of sales, if the firm's tax rate is 40%? (Do not round intermediate calculations. Round your answers to the nearest whole number.)
Accounting breakeven levels of sales units
NPV breakeven levels of sales
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Variable xxxx = xxx of sales revenue 
Therefore, additional profit per $1 of additional sales = xxxxxx 
Depreciation xxxxxxx x xxxxxxxx = xxxx xxx year 
xxxxxxxxxx level xx sales x 
Fixed xxxxxxx including depreciation  =  xxxxxx x xxxx  x $5600 per year 
xxxxxxxxxx xxxxxx from xxxx additional dollar xx sales  0.50 
This xxxxx xxxxx xxxxxxxxxxx to a production xxxxx xx $5600/$70 per unit = xx xxxxxx 
To find the xxx breakeven level of xxxxxx xxxxx xxxxxxxxx xxxx flow. 
xxxx xx taxes: xxxx xxxx = xxxxx × xxxxxx − $2,000 
xxx xxxx xxxxxx xxxxxxx xxxxxx xxx 
xxxxxxxxxx xx project NPV equals zero: 
xxxxxxx xxxxxx − investment x x 
[3.79079 × xxxxx × xxxxxx − $2,000] − $4,000 x 0 
(1.895395 × xxxxxx − xxxxxxx − xxxxxx = x xxxxx x $6110 

This xxxxx xxxxx xxxxxxxxxxx xx a production xxxxx xx $9,524/$70 = almost xx xxxxxx 
xxxxx
xxx xxxxx are xxx of profits. Accounting xxxxxxxxxx xx unchanged xxxxx taxes xxx xxxx xxxx 
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Modern xxxxxxxxx can produce xxxxxxxxx that xxxx xx sold for xxx xxxxx xxx xxxxxxxxxxxx xxxxx costs are xxxxxx xxx xxxx xxx xxxxxxxx costs xxx xxx xxx unit.
a.
If the xxxxxxx xxxxxxxx xx xxxxxxx xxxxxxxxxx xx xxxxxx xxx is expected xx last for x xxxxx and xxx firm xxxx no xxxxxx xxx initial investment will xx xxxxxxxxxxx xxxxxxxxxxxxx xxxx 5 xxxxx to x final value xx xxxxx xxx the xxxxxxxx rate xx xxxx xxxx xxx xxx xxxxxxxxxx and xxx breakeven levels xx xxxxxx (Do not round intermediate calculations. xxxxx your answers to xxx nearest whole xxxxxxxx
xxxxxxxxxxxxxYear x  xxxxx  1  
xxxxx  xxx  xxxxxx  
Year2  xxx  0.8264  
Year 3  800  xxxxxx  
xxxx x  800  0.6830  
Year 5  xxx  xxxxxx 
xxxxxxxxxx breakeven xxxxxx xx xxxxx
xxx xxxxxxxxxx level xx sales xx the sales xxxxx xx xxxxx xxxx x 0 ;
xx xxxxx words:
sales breakeven point x level of xxxxx necessary xx cover xxxxxxxxx costs.
EBIT = Revenues x Variable costs  Fixed costs  xxxxxxxxxxxx = 0
xxxxxxxx  Variable costs x Fixed
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