The Financial Break-Even Point Is Superior to the Accounting Break-Even

question 6

Multiple Choice

The financial break-even point is superior to the accounting break-even point because the financial break-even method:

• A)is more complicated to calculate.
• B)covers the economic opportunity costs of the investment.
• C)is equivalent to sensitivity analysis.
• D)covers the fixed costs of production,which the accounting break-even does not.
• E)provides an economic profit over and above the required rate of return.