A Dime a Dozen Diamonds makes synthetic diamond by treating carbon.
A Dime a Dozen Diamonds makes synthetic diamond by treating carbon.
Each diamond can be sold for $100. The materials cost for a standard diamond is $50. The fixed costs incurred each year for factory upkeep and administrative expenses are $205,000. The machinery costs $ 1.6 million and is depreciated straight-line over 10 years to salvage value of zero.
a. What is the accounting break- even level of sales in-terms of number of diamonds sold?
Break-even sales ? diamonds per year
b. What is the NPV break-even level of diamonds sold per year assuming a tax rate of 30%, a 10-year project life, and a discount rate of 10%? ROUND YOUR ANSWER TO THE NEAREST WHOLE NUMBER.
Break-even sales ? diamonds per year
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