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What is the accounting break-even level for the project

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Reference no: EM132953326

Financial Break-Even Analysis-

You are considering investing in a company that cultivates abalone to sell to local restaurants. The discount rate for the company is 15 percent, the initial investment in equipment is $910,000, and the project's economic life is seven years. Assume the equipment is depreciated on a straight-line basis over the project's life and has no salvage value.

Sales Price per abalone. $43
Variable costs per abalone $10.45
Fixed Cost per year $435,000
Depreciation per year. $130,000
Tax rate. 21%

Problem a. What Is the accounting break-even level for the project?

Problem b. What is the financial break-even level for the project?

Reference no: EM132953326

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