Use the Figure for the Question(s) Below

question 32

Multiple Choice

Use the figure for the question(s) below.
-The graph above shows the break-even analysis for the cost of making a certain good. Based on this chart, which of the following is true?

• A) The net present value (NP
• V) of the project increases with increased cost of goods sold.
• B) The project should not be undertaken if the predicted cost of goods sold is less than $110.
• C) The net present value (NP
• V) of the project will be positive if the cost of goods sold is greater than $110.
• D) If the good costs $110 to make, the net present value (NP
• V) of the project will be zero.

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Definitions:

Managers

Individuals responsible for directing, controlling, and administering all or part of a company or similar organization.

Revenue Maximization

The strategy of adjusting prices or sales volume to generate the highest possible income from sales, not necessarily coinciding with maximum profit.

Takeover Targets

Companies that are potential candidates for acquisition by other companies due to their attractive attributes or undervalued assets.

Profit-Maximizing Firms

Businesses that operate with the objective to produce the quantity of output that maximizes the difference between total revenue and total cost.