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?

Question

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?

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