4. Which of the following is the purpose of determining the NPV break-even level for a...
| 4. | Which of the following is the purpose of determining the NPV break-even level for a project? | |||||||||||||||
| A. The NPV break-even level provides us with the cost of capital at which the net profit equals revenue in the last year of the project | ||||||||||||||||
| B. The NPV break-even level provides us with the unit sales that is needed during the project time horizon in order for the project to achieve a net present value of zero | ||||||||||||||||
| C. The NPV break-even level provides us with the cost of capital at which the operating cash flow equals revenue in the last year of the project | ||||||||||||||||
| D. The NPV break-even level provides us with the payback period of an investment | ||||||||||||||||
| E. The NPV break-even level provides us with the return-on-equity of the project |
Homework Answers
NPV Breakeven Level is sales during Project period which makes NPV is Zero.
OPtion B is correct.
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4.
Which of the following is the purpose of determining the
NPV break-even level for a...
NPV/Break Even
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 133,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided...
Break-even analysis Suppose Snowmobile INC. is considering whether or not to launch a new snowmobile. It...
Break-even analysis Suppose Snowmobile INC. is considering whether or not to launch a new snowmobile. It expects to sell the vehicle for $10,000 over five years at a rate of 100 per year. The varriable cost of making one unit are $5,000 and the fixed costs are expected to be $125,000 per year. The investment would be $1 million and would be depreciated according to the straight-line method over five years with zero salvage value. Snowmoblie Inc's cost of capital...
The accounting break-even level of revenues represents the point at which the project 9) has: A)...
The accounting break-even level of revenues represents the point at which the project 9) has: A) B) C) D) zero pretax profit. zero net present value. covered all opportunity costs. covered the fixed and variable costs but not the depreciation. 10) An automobile manufacturer is developing a new electric vehicle. The development cost is $100 million to be depreciated straight line over 5 years. The fixed costs will be $25 million annually. The variable costs will be $20 thousand per...
1. If a manager were concerned with the time value of money, from which two capital...
1. If a manager were concerned with the time value of money, from which two capital budgeting methods should the manager choose? Multiple Choice IRR or Payback. BET or IRR. BET or Payback. NPV or ARR. NPV or Payback. 2. Restating future cash flows in terms of present values and then determing the payback period using these present values is known as: Multiple Choice Break-even time (BET) Internal rate of return method. Accounting rate of return method. Net present value...
e break-even point will decrease. B. The break-even point will l break-even point will remain constant....
e break-even point will decrease. B. The break-even point will l break-even point will remain constant. Il other things held constant, how will an increase lll The effect on the break-even point can't be predicted with certainty. 4. Fixed costs: A. Fall as sales volume falls. C. Rise as sales volume falls. B. Rise as sales volume rises. D. Remain steady when sales volume changes. 5. Variable costs would include: A. Rent expense B. Depreciation expense-straight line. C. Sales commission...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
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3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Zeta is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Last Tuesday, Cute Camel Woodcraft Company lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Lambda is...
1. A project that just breaks even on a cash basis must have a zero NPV....
1. A project that just breaks even on a cash basis must have a zero NPV. True or False 2. Variable costs are equal to zero when production is equal to zero. True or False 3. Interest expense causes operating cash flow to differ from net income. True or False 4. A project with a high degree of operating leverage is capital intensive. True or False 5. A project that just breaks even on a financial basis has a discounted...
3. Understanding the IRR and NPV 3. Understanding the IRR and NPV Aa Aa E The...
3. Understanding the IRR and NPV
3. Understanding the IRR and NPV Aa Aa E The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Green Caterpillar Garden Supplies Inc.: Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers...
The accounting break-even level of revenues represents the point at which the project 9) has: A) B) C) D) zero pretax profit. zero net present value. covered all opportunity costs. covered the fixed and variable costs but not the depreciation. 10) An automobile manufacturer is developing a new electric vehicle. The development cost is $100 million to be depreciated straight line over 5 years. The fixed costs will be $25 million annually. The variable costs will be $20 thousand per...
e break-even point will decrease. B. The break-even point will l break-even point will remain constant. Il other things held constant, how will an increase lll The effect on the break-even point can't be predicted with certainty. 4. Fixed costs: A. Fall as sales volume falls. C. Rise as sales volume falls. B. Rise as sales volume rises. D. Remain steady when sales volume changes. 5. Variable costs would include: A. Rent expense B. Depreciation expense-straight line. C. Sales commission...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of Investment make capital budgeting decisions Consider the case of Blue Hamster Manufacturing Inc Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and servers crashed. The company's CFO remembers that the internal rate of retur (IRR) of Project Zeta is 13.8%, but he can't reca much Blue Hamster originally invested in...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Zeta is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Last Tuesday, Cute Camel Woodcraft Company lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Lambda is...
3. Understanding the IRR and NPV
3. Understanding the IRR and NPV Aa Aa E The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Green Caterpillar Garden Supplies Inc.: Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers...
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