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QUESTION 11 A breakpoint is best described as the point in the range of capital cost...

QUESTION 11

  1. A breakpoint is best described as

    the point in the range of capital cost where the firm is indifferent between two mutually exclusive projects

    the point where the present value of cash inflows (PVI) is exactly equal to the present value of cash outflows (PVO)

    a rank-ordering that is suboptimal

    the dollar amount of total funding where capital costs increase
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Answer #1

Break even point is a point at which total revenues will be equal to total cost so there will not be any profits so it can be said that it is a point where the present value of cash inflows is iexactly equal to the present value of cash outflows.

All the other options except option ( b) are incorrect as it is not a rank ordering that is sub optimal or range of capital cost.

Correct answer is option (B)the point where the present value of cash inflows is exactly equal to the present value of cash outflows.

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