In the Present-Value Break-Even the EAC Is Used To

question 18

Multiple Choice

In the present-value break-even the EAC is used to:

• A) determine the opportunity cost of investment.
• B) allocate depreciation over the life of the project.
• C) allocate the initial investment at its opportunity cost over the life of the project.
• D) determine the contribution margin to fixed costs.

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Definitions:

Returns To Scale

The change in output resulting from a proportional change in all inputs (factors of production) in the long term, indicating whether the output increases, decreases, or stays the same.

Production Function

A mathematical expression that describes the relationship between inputs used in production and the output generated from those inputs.

Input

The resources used in the production process, such as labor, raw materials, and capital.

Returns To Scale

The change in output resulting from a proportional change in all inputs (factors of production) in the production process.