CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Which of the following is correct?
A. Accounting breakeven quantity will increase with an increase in fixed costs.
B. If the discount rate increases, the quantity required to be sold for accounting breakeven increases.
C. Accepting a project that has accounting breakeven will leave the value of a firm unchanged.
Explanation: Accounting breakeven quantity = (FC + Depre) / (P - VC)

Accounting breakeven implies the project will have a negative NPV and hence decrease the value of the firm.

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