Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
The project is operating at the ________ under the base-case scenario.
A) Most profitable level.
B) Accounting break-even level.
C) Point where the IRR is equal to -100%.
D) Financial break-even point.
E) Cash break-even level.

Question

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
The project is operating at the ________ under the base-case scenario.
A) Most profitable level. 
B) Accounting break-even level. 
C) Point where the IRR is equal to -100%. 
D) Financial break-even point. 
E) Cash break-even level.

Quizplus · Accepted Answer

The Answer of Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
The project is operating at the ________ under the base-case scenario.
A) Most profitable level. 
B) Accounting break-even level. 
C) Point where the IRR is equal to -100%. 
D) Financial break-even point. 
E) Cash break-even level.

Magellen Industries Is Analyzing a New Project