Modern Artifacts can produce keepsakes that will be sold for $88 each. Nondepreciation fixed costs are $950 per year and variable costs are $66 per unit.
a. If the project requires an initial investment of $3,000 and is expected to last for 6 years and the firm pays no taxes, what are the accounting and economic break-even levels of sales? The initial investment will be depreciated straight-line over 6 years to a final value of zero, and the discount rate is 8%.
b. How do your answers change if the firm's tax rate is 35%?
(Use fractional unit sales when calculating $ sales. Round your final answers to the nearest whole number. Round PV and FV factors to 5 decimal places. Do not round intermediate calculations. Omit the "tiny_mce_markerquot; sign in your response.)
a. Accounting break-even level of sales = $ ____________ per year, or ____________ units.
Economic break-even level of sales = $ ____________ per year, or almost ____________ units
b. Accounting break-even level of sales = $ ____________ per year, or ____________ units.
Economic break-even level of sales = $ ____________ per year, or almost ____________ units