If the level of sales is less than that calculated as the NPV break-even level, then the:
A)Project will break even only in accounting terms
B)Project's NPV will be greater than zero but less than the opportunity cost of capital
C)Project will have a negative NPV
D)Discount rate should be reduced

Question

Quizplus · Accepted Answer

If the level of sales is less than the NPV break-even level, it means that the project is not generating enough cash flows to cover its costs and achieve a positive net present value. Therefore, the project will have a negative NPV, which indicates that it is not economically viable and should not be pursued. A and B are incorrect because they suggest that the project is somehow profitable or beneficial, while D is not a relevant solution to this problem.

If the Level of Sales Is Less Than That Calculated