A Project That Just Breaks Even on a fiNancial Basis

question 48

Multiple Choice

A project that just breaks even on a financial basis _______________.

• A) Does not pay back.
• B) Will exactly pay back by the end of the project.
• C) Will pay back prior to the end of the project.
• D) Has an IRR equal to 0 %.
• E) Has a profitability index of 2.

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Definitions:

Same-Store Sales

A retail industry metric comparing the revenue earned from established stores in a certain period to the revenue during a similar period in the past.

Asset Intensity

Amount of assets needed to generate a given level of sales.

Risk-Return Tradeoff

The principle that potential return on investment increases with the degree of risk.

Capital Investment Analysis

Process of comparing the costs and benefits of a long-term asset investment.