You are starting a new business that sells lab created diamonds. Each diamond can be...
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Accounting
You are starting a new business that sells lab created diamonds. Each diamond can be sold for $100. The materials cost for a standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $217,000. The machinery costs $2.6 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? (Do not round intermediate calculations.) b. What is the NPV break-even (Financial break-even) level of diamonds sold per year assuming a tax rate of 21%, a 10-year project life, and a discount rate of 10%?
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