21. Which of the following statements are correct concerning the accounting break-even point?I. The net income is equal to zero at the accounting break-even point.II. The net present value is equal to zero at the accounting break-even point.III. The quantity sold at the accounting break-even point is equal to the total fixed costs plus depreciation divided by the contribution margin.IV. The quantity sold at the accounting break-even point is equal to the total fixed costs divided by the contribution margin.
A.I and III onlyB. I and IV onlyC. II and III onlyD. II and IV onlyE. I, II, and IV onlyDifficulty level: MediumTopic: Accounting Break-Even
22. All else constant, the accounting break-even level of sales will decrease when the:
Difficulty level: MediumTopic: Accounting Break-Even
23. The point where a project produces a rate of return equal to the required return is known as the:
Difficulty level: Easy
Topic: Present Value Break-Even
9-35

Chapter 09 - Risk Analysis, Real Options, and Capital Budgeting
24. Which of the following statements are correct concerning the present value break-even point of a project?I. The present value of the cash inflows equals the amount of the initial investment.II. The payback period of the project is equal to the life of the project.III. The operating cash flow is at a level that produces a net present value of zero.IV. The project never pays back on a discounted basis.
Difficulty level: MediumTopic: Present Value Break-Even
25. The investment timing decision relates to:
A. how long the cash flows last once a project is implemented.B. how frequently the cash flows of a project occur.C.the decision as to when a project should be started.D. how frequently the interest on the debt incurred to finance a project is compounded.E. the decision to either finance a project over time or pay out the initial cost in cash.Difficulty level: MediumTopic: Investment Timing Decision
9-36

Chapter 09 - Risk Analysis, Real Options, and Capital Budgeting

#### You've reached the end of your free preview.

Want to read all 68 pages?

- Fall '13
- Net Present Value, Options