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Valerie just completed analyzing a project. Her analysis indicates that the project will have a six-year life and require an initial cash outlay of $120,000. Annual sales are estimated at $189,000 and the tax rate is 21 percent. The net present value is negative $120,000. Based on this analysis, the project is expected to operate at the: Multiple Choice financial break-even point. accounting break-even point. cash break-even point. minimum possible level of production. maximum possible level of production.

Respuesta :

Answer:

cash break-even

Explanation:

According to the scenario, computation of the given data are as follows,

Net present value = -$120,000

Cash outlay = $120,000

As net present value is negative, then financial break-even and accounting break-even is not possible.

Here, Net present value = initial cash outlay

So, it shows cash break-even.

Hence, the project is expected to operate at cash break-even.

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