When You Set the Project NPV Equal to Zero in Calculating

question 162

Multiple Choice

When you set the project NPV equal to zero in calculating a bid price you are:

• A) Going to earn zero net income on the project.
• B) Appropriately including opportunity costs in your analysis.
• C) Certain to be the low bidder since, if any firm does bid lower, they will be bidding based on a negative NPV project.
• D) Assured of earning your firm's highest possible IRR.
• E) Finding the price at which you expect to create zero wealth for your shareholders.

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Definitions:

Materials

Physical substances or components used in the production of goods or in the execution of projects and services.

Workstation

A specific area or desk equipped with the necessary tools and technology for an individual to perform their job tasks.

Improve Workflow

To make enhancements in the process or set of processes through which work is accomplished, aiming for greater efficiency.

Breakeven Point

The level of production or sales at which total costs equal total revenue, meaning there is no profit or loss.