You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information:
Sales price per abalone= $37.50
Variable costs per abalone=$12.84
Fixed costs per year=$575.00
Depreciation per year=$55,000
Tax rate=35%
The discount rate for the company is 13 percent, the initial investment in equipment is $365,000, and the project's economic life is seven years. Assume the equipment is depreciated on a straight-line basis over the project is:
a. What is the accounting break-even level for the project?
b. What is the influential break-even level for the project?