Southampton Electronics Manufactures a Range of Portable Heaters -
the Break-Even Level in Sales Pounds Is:

A)£210,000

question 20

Multiple Choice

Southampton Electronics manufactures a range of portable heaters. Most of the output is exported. $\begin{array}{lrr} \text { Sales. } & \text { 12,000 units } \\ \text { Selling price. } & \text { £25 per unit} \\ \text { Contribution margin ratio. } &40\%\\ \text { Margin of safety percentage. } &30\%\\\end{array}$

-
The break-even level in sales pounds is:

• A)£210,000
• B)£120,000
• C)£180,000
• D)£ 84,000

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by comparing the present value of its cash inflows to the present value of its cash outflows.

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Discount Rate

The interest rate used to determine the present value of future cash flows, guiding investment and financing decisions by reflecting the opportunity cost of capital.

NPV

An abbreviation for Net Present Value, it assesses the worth of future cash flows in today's dollars, subtracting the initial investment.