Ross has the following calculations on a spreadsheet: Year 1 accumulated costs of 5000;year 2 accumulated costs of 7500;year 3 accumulated costs of 9500;year 4 accumulated costs of 10500 and year 5 accumulated costs of 13000.And year 1 accumulated benefits of 300;year 2 accumulated benefits of 2300;year 3 accumulated benefits of 6500;year 4 accumulated benefits of 10475;and year 5 accumulated benefits of 15,425.The break-even point would occur in which year?
A)Year 1
B)Year 2
C)Year 3
D)Year 4
E)Year 5

Question

Quizplus · Accepted Answer

To find the break-even point, we need to determine the point at which the accumulated benefits equal the accumulated costs. We can do this by subtracting the accumulated benefits from the accumulated costs for each year until we get a positive value.

Year 1: Costs - Benefits = 5000 - 300 = 4700 (Negative)
Year 2: Costs - Benefits = 7500 - 2300 = 5200 (Negative)
Year 3: Costs - Benefits = 9500 - 6500 = 3000 (Positive)
Year 4: Costs - Benefits = 10500 - 10475 = 25 (Positive)
Year 5: Costs - Benefits = 13000 - 15425 = -2425 (Negative)

The break-even point occurs in year 4, where the accumulated benefits finally exceed the accumulated costs. Therefore, the best choice is D.

Ross Has the Following Calculations on a Spreadsheet: Year 1