Which one of the following statements is correct when a project is operating at its accounting profit break-even point?
A)The project is just recovering the cost of the initial investment.
B)The aftertax profit is equal to the initial investment.
C)The project just pays back on a discounted basis.
D)The project's IRR is equal to zero.
E)The contribution margin is equal to zero.

Question

Quizplus · Accepted Answer

At the accounting profit break-even point, a project is just recovering its operating costs and the cost of the initial investment, but not making an accounting profit beyond that. This means it covers both variable and fixed costs, including depreciation, but does not necessarily imply any of the other outcomes listed in options B, C, D, or E.

Which One of the Following Statements Is Correct When a Project