FINANCIAL BREAK EVEN POINT is the point where NPV =0
and
NPV = Present value of all cash flows - initial investment
As we put NPV =0
Present value of all cash flows = initial investment
so statement is true
Answer : TRUE [Thumbs up please]
In a financial break-even calculation, the present value of the cash inflows equals the amount of...
What is the present value of the cash inflows if a project uses a 12 discount rate. The initial investment will be $12,950 and produce $3,000 in annual cash inflows. The estimated life of the project is ten years. Also, calculate the profitability index.
Can you answer/correct the cash break-even and financial break even portion please. Wettway Sailboat Corporation is considering whether to launch its new Margo-class sailboat. The selling price will be $50,000 per boat. The variable costs will be about half that, or $29,000 per boat, and fixed costs will be $555,000 per year. The total investment needed to undertake the project is $4,000,000. This amount will be depreciated straight-line to zero over the 5-year life of the equipment. The salvage value...
Problem 24-5A Payback period, break-even time, and net present value LO P1, A1 Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $252,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 3 years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table...
Which of the following is true regarding the calculation of net present value? procent value present value of inflow-present vak of outillows et present value-outflows-inflows et present value = inflows-outflons et present value = present value of outflows- present value of inflows Question 8 Acompany has two different investment opportunities, both requiring an initial payment of $150,000. The company's desired rate of return is 10% Project A Year 1 $100,000 Year 2 $100,000 What is the NPV of Project A?...
roller company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $125,000 and $100,000, respectively. The present value of cash inflows and outflows for the second alternative is $300,000 and $262,500, respectively. a. calculate the net present value of each investment opportunity b. calculate the present value index for each investment opportunity c. indicate which investment will produce the higher rate of return Exercise 10-7A Using the present value...
In a break-even point model, if the decision is to produce less than the break-even amount, there will be a profit. True False
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,000,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 $325,000 $450,000 $425,000...
Net present value is defined as the difference between the present value of the investment’s net cash inflows and the investment’s initial cost. True or False
the difference between the present value of cash inflows and the present value of cash outflows associated with a project is known as
Benson Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $140,000 and $106,000, respectively. The present value of cash inflows and outflows for the second alternative is $315,000 and $270,000, respectively. Required Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.) Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.) Indicate which investment...