Which One of the Following Statements Is Correct About a Project

question 272

Multiple Choice

Which one of the following statements is correct about a project with an estimated internal rate of return of negative 100 percent?

• A) The net present value of the cash inflows is exactly equal to the initial investment in the project.
• B) The estimated sales volume is equal to the cash break-even level of sales.
• C) The estimated sales volume is equal to the financial break-even level of sales.
• D) The payback period is exactly equal to the life of the project.
• E) The net present value of the project is equal to zero.

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Definitions:

Average Total Cost

The aggregate expense of manufacturing (sum of constant and fluctuating costs) spread over the entire volume of goods produced.

Marginal Revenue

represents the extra revenue that an undertaking receives from selling one additional unit of a product or service.

Monopolistically Competitive

Describes a market structure where many companies sell products that are similar but not identical.

Profit-Maximizing

A strategy or approach focused on adjusting production and operational variables to achieve the highest possible profit margins.