Modern company can produce handbags that will be sold for $90 each. Non-depreciation fixed costs are...
Modern company can produce handbags that will be sold for $90
each. Non-depreciation fixed costs are $1000
per year, and variable costs are $60 per unit. The initial
investment of $3000 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?
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 35%?
d) What is the NPV break-even level of sales if the firm's tax rate
is 35%?
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Modern company can produce handbags that will be sold for $90
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