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.

Question

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.

Quizplus · Accepted Answer

A break-even analysis graph typically shows the point where total costs equal total revenues, indicating no profit or loss (net present value of zero). If the cost of goods sold is $110 and this is the break-even point, it means the NPV will be zero at this cost, as revenues and costs are equal.

Use the Figure for the Question(s) Below