A Small Business Has the Following Revenue and Cost Functions

question 17

Multiple Choice

A small business has the following revenue and cost functions for a product: and . If the break-even point lies where revenue equals cost, how many break-even points are there?

• A)0
• B)1
• C)2

---

Definitions:

Present Value

The immediate worth of anticipated money or streams of cash flows, computed with an agreed-upon rate of return.

Cash Inflows

Money received by a business from its operational, financing, and investing activities.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument; a measure of the time value of money.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the opportunity cost of capital.