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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon

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Question;Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140.00, the materials cost for a standard diamond is $40.00, the fixed costs incurred each year for factory upkeep and administrative expenses are $216,000, the machinery costs $2.5 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? B) what is the NPV break-even level of sales assuming a tax rate of 35%, a 10-year project life, and a discount rate of 12%?

 

Paper#49712 | Written in 18-Jul-2015

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