Steven J's Gallery can produce prints that will be sold for $50 each.

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Steven J's Gallery can produce prints that will be sold for $50 each. Non-depreciation fixed costs are $2,500 per year and variable costs are $30 per unit. A) If the project requires an investment of $2,000 and is expected to last 5 years and the firm pays no taxes. The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 10%. What are the units needed for accounting break-even levels of sales and NPV break-even levels of sales? B) What will be units needed for the accounting and NPV break-even levels of sales if the firm's tax rate is 40%?

    • 12 years ago
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