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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon Each diamond can be sold for $140 The materials cost for a standard diamond is $40 The fixed costs incurred each year for factory

Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140. The materials cost for a standard diamond is $40. 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?

 

Break-even sales  

 

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%? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

Break-even sales  

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May 14 2020 View more View Less

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