If Project Sales Exceed the Accounting Break-Even Point,but the Project

question 15

Multiple Choice

If project sales exceed the accounting break-even point,but the project has a negative EVA,then the project has a:

• A) positive NPV but earns less than the discount rate.
• B) negative NPV but earns more than the discount rate.
• C) net loss on the income statement.
• D) net profit but negative NPV.

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the amount of the good that suppliers are willing to sell at that price.

Market Demand

The total amount of a product or service that all consumers in a market are willing and able to purchase at various prices.

Equilibrium Price

This is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a state of market balance.

Quantity Discounts

Reductions in price offered by sellers to buyers who purchase large volumes or quantities of a product, incentivizing bulk purchasing.