Which of the following break-even analyses yields a negative net present value? I. accounting break-even II. cash break-even III. financial break-even O a. I only O b. ll only O c. Ill only Od. I and II only O e. II and III only

Which of the following break-even analyses yields a negative net present value? I. accounting break-even II. cash break-even III. financial break-even O a. I only O b. ll only O c. Ill only Od. I and II only O e. II and III only

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: Rates of returns on annuities cannot be calculated with a formula. True False

A: Rate of return refers to the return earned by the investors over the investment ampunt which is…

Q: Does the payback-period analysis ignore differences in the timing of cash flows?

A: The time value of money (TVM) is the possibility that in view of its inevitable procuring influence,…

Q: When calculating the present worth of a uniform series using the relationship P = A(P|A, i%,n), the…

A: P equals to A times the factor of P over A and this factor known as the Uniform Series of Present…

Q: For one lump sum FV, the PV of your future liquidity decreases a. as FV increases.b. as t decreases.…

A: Where:PV is the present ValueFV is the future Valuer is the discount ratet is number of years

Q: ternal rate of return (IRR) and net presetn value (NPV): -Generally arrive at the same…

A: Net present value is basic technique used in capital budgeting as it considers the time value of…

Q: A) Inflation rate; B) Interest rate; C) Not doing something; 2. People prefer to receive cash: A)…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: An abnormal return occurs: Only when the actual return is lower than the expected return. Only…

A: A market is said to be efficient, if intrinsic Value of the Security is equal to Market price of the…

Q: Assuming that we are not able to accurately predict cash flows , generally decreased risk is thought…

A: Cash flow at risk at risk tells us how changes in market factors can change the future cash flows.…

Q: Consider the following two projects: Year 0 Cash Flow - 100 - 73 Project A B 22.7 45.3 18.1 Year 1…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: Which of the following statements is false? (You may select more than one answer.)a. The total-cost…

A: Capital budgeting refers to the process by which long-term investment proposals are evaluated based…

Q: Which of the following statements is correct? The NPV method assumes that cash flows will be…

A: Solution:- Net Present Value (NPV) means the net of the present value of cash inflows and initial…

Q: what are usefulness and weakness of discounted cash flow method?

A: Discounted Cashflow Method is the Method in which we compare Initial Project cost with expected…

Q: 15. Standard deviation can be used to measure a) Risk of an investment, b) Return of an investment,…

A: The correct answer is: a) Risk of an investment.

Q: The discounted payback method is better than the regular payback method because The time value of…

A: Payback period is the amount of time required to recover initial investment. Regular payback period…

Q: cash flow frequ ot the same, one W oved: the period

A: Period interest rate approach : In simple words, the period interest rate approach refers to the…

Q: Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?

A: Short Run: This refers to the factor of production where capital is fixed. The time period in such a…

Q: If short - term rate - sensitivity asset - liability GAP is negative : a)Decrease in Interest Rate…

A: Several statements have been provided explaining the impact of net interest income in case short -…

Q: 26. Real interest rate and real cash flows do not include A. equity effects B. debt effects C.…

A: Interest rate refers to the rate at which one party agrees to lend and the other party agrees to…

Q: Payback method is Select one: a. None of the options b. Yield on investment c. PV of cash inflow- PV…

A: Payback method is one of the capital budgeting technique which helps in evaluating profitability of…

Q: echnical problems associated with the internal rate of return include:

A: IRR (Internal Rate of Return): It is the rate of return that makes the net present value of the…

Q: Which of the following exposure does not have cash flow effect? Group of answer choices Transaction…

A: The transaction that results in either cash inflow or cash outflow is supposed to affect cash flow.…

Q: Following IFRS, which statement is false? Group of answer choices If the revaluation initially…

A: The objective of this question is to identify the false statement among the given options related to…

Q: technique is better and why?

A: Capital budgeting is a method of choosing the best investment project out of the available…

Q: Give typing answer with explanation and conclusion Which of the following are violations of…

A: The weak-form Efficient Market Hypothesis (EMH) states that all past price and volume data is…

Q: As the discount rate increases A. present value factors decrease B. Present value factors remain…

A: Solution: As the discount rate increases "present value factors decrease".

Q: The additional return earned by holding a commodity that is in short supply or a nonpecuniary gain…

A: Answer- The Convenience Yield - A premium that is earned by people who hold a physical commodity.…

Q: Provide intuition for the asset pricing equation: Pt = Et (Mt+1Xt+1) where M is the stochastic…

A: The Asset Pricing Program investigates the variables that affect the costs and yields of financial…

Q: When adjusting for inflation, there are two methods. The real- rate method where the discount rate…

A: The real rate method involves adjusting the discount rate or interest rate to account for inflation.…

Q: Which of the following alternative assumes that accessibility of capital is infinite? a. Equivalent…

A: The equivalent uniform annual cost can be defined as a capital budgeting concept used to identify…

Q: (a) Both depreciation and interest on borrowed money are by default in then-current form and thus,…

A: "Since you have posted multiple questions with multiple sub parts, we will provide the solution…

Q: Which of the following statements are correct? The internal rate of return (IRR) generated by a…

A: IRR (Internal Rate of Return)IRR is the discount rate at which the net present value (NPV) of cash…

Q: isk that affects at most a small num a. total risk b. portfolio risk c. unsystematic risk D

A: Risk refers to the form of uncertainties linked to a business proposal, investment, or even in the…

Q: Consider the following statements concerning the payback method of investment appraisal. 1. It…

A: The payback method of investment appraisal is a simple technique that calculates the amount of time…

Q: then these assets vary in

A: The constant growth model is a method for valuing the share price of a stock. It calculates the…

Q: The only time you change the original cash flow diagram in problems involving uniform series cash…

A: Cash flow diagrams are defined as business tools that are used to represent the cash flows that is…

Q: the assets' risk is the asset returns a

A: Step 1 Covariance is a statistical measure of how two assets move concerning each other. It…

Q: The present value of a future amount: a. will always be less than the future amount b. can be…

A: Present value = Future value / (1+i)^twherei = discount ratet = number of periods

Q: The receivales turnover ratio is used to analyze profitability. liquidity. risk a. b. С. nventors d.…

A: Receivable Turnover Ratio = Net Credit Sales / Average Receivable

Q: All else equal, as market interest rates fall, the present value of a future cash flow. the…

A: Present value is the equivalent today based on time value of money of the future cash flow that is…

Q: The process for converting present values into future values is called four time-value-of-money…

A: Time Value of money The time value of money is the concept that money available at the present time…

Q: Cash flows cannot be added together unless

A: The concept of time value of money states that value of money and hence value of cash flows changes…

Q: 6

A: A counterbalancing error happens when an error is happen and that cancels out another error. It is…

Q: A declining trend in the capital outlay ratio could be an indicator of deferred replacement of…

A: Capital Outlay Ratio:/The capital outlay ratio is a financial metric used to assess the efficiency…

Q: 3. In a comparison of the NPV and IRR techniques, which of the following is true? statements A. Both…

A: In this question, we are required to determine the correct statement regarding NPV and IRR.

Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Where do nothing was preferred what assumption is being made about the return generated by the…

A: When the phrase "where nothing was preferred" is mentioned, it implies that the return generated by…

Q: Which of the following are problems in using net present value to appraise an investment? 1. The…

A: In evaluating the various investment proposals, one of the methods used is NPV method. In this…

Q: If the rates of return of two assets tends to move in the same direction, they have a negative…

A: Covariance measures the relationship of direction between the returns on two assets or securities.…

Question

Which of the following break-even analyses yields a negative net present value?
I. accounting break-even
II. cash break-even
III. financial break-even
O a. I only
O b. ll only
О с.
Ill only
O d. I and II only
e. II and III only

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction for break even analysis:

VIEW

Step 2: Explanation for each option:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Q.Regarding the concept of opportunity cost, one affirmation is false. Which one is it? a. is not relevant in fundamental analysis b. is the rate of return given up by an investor, in order to gain another rate of return c. can play both the role of a discount rate or a capitalizing rate d. is relevant in determining the fair value of derivatives and corporate bonds e. is always computed as a percentage indicator
As the required rate of return on an asset decreases 1. 11. III. Asset prices increase because the cash flows increase Asset prices increase because the present value of cash flows increases Asset prices decrease because there is a negative relationship between prices and returns O a. I only O b. lll only O c. Il only O d. I and II e, II and III
Which of the following statements is true? A. The percentage decrease in value when the yield-to-maturity (YTM) increases by a given amount is smaller than the increase in value when the yield-to-maturity (YTM) decreases by the same amount. B. Ratio analysis expands GAP analysis to focus on the sensitivity of bank profits across different interest rate environments. C. The repurchase price is smaller than the selling price and accounts for the interest charged by the buyer, who is lending funds to the seller with the security as collateral. D. The issuers or the firms issuing the bonds are rated on their junior unsecured debt.
Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $58 per share. She borrows $2,200 from her broker to help pay for the purchase. The interest rate on the loan is 12%. Required:a. What is the margin in Dée’s account when she first purchases the stock? b. If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account? c. If the maintenance margin requirement is 30%, will she receive a margin call?multiple choice Yes No Correct d. What is the rate of return on her investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $58 per share. She borrows $2,200 from her broker to help pay for the purchase. The interest rate on the loan is 12%. Required:a. What is the margin in Dée’s account when she first purchases the stock? b. If the share price falls to…
The Profitability Index (PI) is a financial metric that depends only on the Present Value (PV) of expected future cash inflows. This statement is: a False. b Only partly true. c True d Only partly false.
Which of the following statements true? I. All else equal, an increase in storage costs, decreases the value of the forward on an asset All else equal, an increase in convenience yield, decreases the value of the forward on an asset I. A) I. and II. are true B) I. is true and II. is false C) II. is true and I. is false D) I. and II. are false Win Win
9 A _____currency is one whose value is set primarily by market forces of supply and demand A. Pegged B. Floating c. Managed D. Depreciated
9. Which one of the following is the advantage of payback period method? a. Does not consider time value of money b. Simple and easy to understand c. Ignores cash beyond payback period d. None of the options
Which one of the following is not the goals of Monetary policy? a. Low inflation O b. Low employment O c. Economic growth d. None e. Balance of Payment Clear my choice
Why is it more reasonable to assume, as the NPV rule does, that the intermediate cash flows are reinvested at the cost of capital rather than the internal rate of return (IRR)?
This can occur when a selection among mutually exclusive alternatives is based wrongly on maximization of IRR on the total cash flow. O a. Investment errors O b. Ranking errors Ос. Incremental errors Od. Alternative errors
Which of the following is NOT a limitation of the payback rule? O It does not consider cash flows occurring after the payback period. O Lacks a decision criterion that is economically based. O It does not consider the time value of money. O It is difficult to calculate.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS