Which one of the following statements is true concerning break-even points?
A) The cash break-even quantity is equal to (FC + D)/(P - v).
B) At the accounting break-even point, a project never pays back the initial investment.
C) The financial break-even point is generally higher than the accounting break-even point.
D) The IRR is just equal to the required return at the cash break-even point.
E) The financial manager is more interested in the cash break-even point than in the financial or accounting break-even points.

Question

Quizplus · Accepted Answer

The financial break-even point is generally higher than the accounting break-even point because it takes into account not just the fixed and variable costs (like the accounting break-even does), but also the financing costs and any required return for investors. This makes the financial break-even point a more comprehensive measure, reflecting the total amount of revenue needed to cover all costs and financial obligations.

Which One of the Following Statements Is True Concerning Break-Even