Use the following statements to answer this question:
I.The NPV break-even point is the same as the IRR of the project
II.By assessing the NPV break-even point, managers estimate the break-even level of operating cash flows required for the project.

Question

Quizplus · Accepted Answer

Both statements I and II are correct. The NPV break-even point refers to the discount rate at which the present value of the expected cash inflows equals the present value of the expected cash outflows, resulting in an NPV of zero. This discount rate is also known as the Internal Rate of Return (IRR) of the project. By assessing the NPV break-even point, managers can estimate the level of operating cash flows required to break even and determine if the project is financially viable.

Use the Following Statements to Answer This Question