What Two Forecasts Are Used in a Break-Even Analysis

question 95

Multiple Choice

What two forecasts are used in a break-even analysis?

• A)production and sales
• B)profit and loss
• C)revenue and production
• D)market share and sales
• E)sales and expense

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Definitions:

Cost of Capital

The target earnings rate that a company seeks on investments to preserve its value in the market and gather funds.

Mutually Exclusive

Decisions or projects that, if chosen, prevent the selection of one or more other options.

Present Value

The present value of a future amount of money or series of cash flows, adjusted for a certain return rate.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, using cash flow estimates without considering the time value of money.