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Implications of break-even production units

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Company A is considering a proposal to produce furniture. It will involve an initial investment of $100,000 that can be depreciated over 10 years using straight-line method. In each of years 1-10, the project incurs variable costs of 40% of sales and fixed cost of $30,000. The corporate tax rate is 30%, and the cost of capital is 10%. If the selling price per unit is $50.

a. Please calculate the NPV and accounting break-even levels of unit productions.

b. Please discuss the implications of break-even production units.

Reference no: EM133204966

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