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Unformatted text preview: the project is 12 percent. What is the project NPV? 1 2 3 4 5 Sales (millions of traps)- 0. 5 0. 6 1. 0 1. 0 0. 6 2) Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $40. The fixed costs incurred each year for the factory upkeep and administrative expenses are $200,000. The machine costs $1 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 the number of diamonds sold? b. What is the economic break-even level of sales assuming a tax rate of 35 percent, a 10 year project life, and a discount of 12 percent?...
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This note was uploaded on 02/09/2010 for the course FINA 3001 taught by Professor Molly during the Spring '10 term at University of Minnesota Duluth.
- Spring '10