What is the accounting break-even level of sales

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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $120. The materials cost for a standard diamond is $70. The fixed costs incurred each year for factory upkeep and administrative expenses are $215,000. The machinery costs $2.3 million and is depreciated straight-line over 10-years to a salvage value of zero.

A). What is the accounting break-even level of sales in terms of number of diamonds sold?

Answer is 8,900 diamonds

B). What is the NPV break-even level of diamonds sold per year assuming a tax rate of 21%, a 10-year project life, and a discount rate of 10%? (Do not round intermediate calculations, round your answer to the nearest whole number.)

Reference no: EM132638275

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