Accounting Break-Even Analysis Uses

question 45

Multiple Choice

Accounting break-even analysis uses

• A) free cash flows over the entire life of a project.
• B) sales, variable costs and fixed costs over the entire life of a project.
• C) sales, variable costs and fixed costs for a single period.
• D) free cash flows for a single period.

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Definitions:

Time Value

The principle that current money has a higher value than the same amount would in the future, given its potential to earn more.

Money

A medium of exchange that is widely accepted in transactions for goods and services, acting as a unit of account, a store of value, and sometimes, a standard of deferred payment.

Compounding

A method in which an investment's worth grows over time as the returns, including both capital gains and interest, accumulate interest.

Compound Interest

The practice of charging interest on the principle amount along with the interest that has been piled up from past periods, relevant to both lending and saving scenarios.