A Project That Just Breaks Even on an Accounting Basis

question 298

True/False

A project that just breaks even on an accounting basis must have a positive NPV.

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Definitions:

Net Income

The net income of a company, calculated by deducting all costs, taxes, and expenses from its total revenue.

Accounting Break-even

The point at which a company's total sales equal its expenses, thus resulting in neither profit nor loss, based strictly on accounting figures not considering cash flow.

Variable Cost

Costs that change in proportion to the activity of a business.

Fixed Costs

Fixed expenses unaffected by the volume of production or sales, like rent, insurance, and wages.