Firms often calculate a project's break-even sales using book earnings.However,break-even sales based on NPV is generally:
A)higher than the one calculated using book earnings.
B)lower than the one calculated using book earnings.
C)equal to the one calculated using book earnings.
D)not related to the one calculated using book earnings.

Question

Quizplus · Accepted Answer

Break-even sales based on NPV is generally higher because NPV accounts for the time value of money and requires covering both fixed costs and the cost of capital, unlike book earnings which do not consider the time value of money.

Firms Often Calculate a Project's Break-Even Sales Using Book Earnings