29-B-C-F-C-B_(90) - financial break-even. For a project...

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Break-Even Assume a firm is considering a new project that requires an initial investment and has equal sales and costs over its life. Will the project reach the accounting, cash, or financial break-even point first? Which will it reach next? Last? Will this ordering always apply? SOLUTION The project will reach the cash break-even first, the accounting break-even next and finally the
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Unformatted text preview: financial break-even. For a project with an initial investment and sales after, this ordering will always apply. The cash break-even is achieved first since it excludes depreciation. The accounting break-even is next since it includes depreciation. Finally, the financial break-even, which includes the time value of money, is achieved....
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This note was uploaded on 06/17/2011 for the course FIN 101 taught by Professor Paul during the Spring '11 term at Aligarh Muslim University.

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