Which of the Following Statements Are Correct Concerning the Present

question 30

Multiple Choice

Which of the following statements are correct concerning the present value break-even point of a project?
I. The present value of the cash inflows equals the amount of the initial investment.
II. The payback period of the project is equal to the life of the project.
III. The operating cash flow is at a level that produces a net present value of zero.
IV. The project never pays back on a discounted basis.

• A) I and II only
• B) I and III only
• C) II and IV only
• D) III and IV only
• E) I, III, and IV only

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Definitions:

Surplus Supply

Occurs when the quantity of a good or service supplied is greater than the quantity demanded at a given price.

Food for Peace

A U.S. government program designed to combat world hunger through the donation and sale of U.S. food to developing countries.

Price Supports

Government interventions to maintain the market price of a commodity or product above its equilibrium level, often to protect producers' incomes.

American Exports

Items and services manufactured in the United States that are marketed to other countries.