What Is the Economic Break-Even Level of Sales for a Project

question 44

Multiple Choice

What is the economic break-even level of sales for a project costing $4,000,000 and generating annual cash flows equal to 0.30 × sales − $450,000? Assume the project will last 10 years and require a discount rate of 12%.

• A) $2,093,654
• B) $2,359,047
• C) $3,859,789
• D) $13,783,333

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period, typically measured as a percentage increase in real gross domestic product (GDP).

Pollution Regulations

Laws and rules established to control or reduce harmful emissions and waste to protect the environment and public health.

Energy Costs

The expenses associated with the consumption of energy, affecting both consumers and industries in terms of heating, electricity, and fuel.

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, transforming agricultural societies into more industrialized ones.