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You are considering investing in a company that cultivates abalone for sale to local restaurants. Use the following information:

Sales price per abalone= $37.50

Variable costs per abalone=$12.84

Fixed costs per year=$575.00

Depreciation per year=$55,000

Tax rate=35%

The discount rate for the company is 13 percent, the initial investment in equipment is $365,000, and the project's economic life is seven years. Assume the equipment is depreciated on a straight-line basis over the project is:

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

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92258056

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