Whether the new project of a firm will reach cash breakeven point, accounting breakeven point or financial breakeven point first. Also, determine which reaches second and last. Introduction: Accounting break-even is a sales point at which there is no profit or loss. It is the most widely used measure of break-even point. Financial break-even point is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value has to be zero. Cash break-even point specifies a sales level that can result in a zero operating cash flow.

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Chapter 11, Problem 7CRCT

Summary Introduction

To discuss: Whether the new project of a firm will reach cash breakeven point, accounting breakeven point or financial breakeven point first. Also, determine which reaches second and last.

Introduction:

Accounting break-even is a sales point at which there is no profit or loss. It is the most widely used measure of break-even point.

Financial break-even point is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value has to be zero.

Cash break-even point specifies a sales level that can result in a zero operating cash flow.

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