Final answer:
The point where the total value of benefits equals total costs is known as the breakeven point. It is central in evaluating investments and business decisions using the present discounted value method. This method also helps in assessing the optimal level of investment by considering future profits and costs.
Step-by-step explanation:
The term for the point where the total value of benefits equals total costs is A. Breakeven. This concept is fundamental in business and economics, as it represents the point at which an investment or business starts to generate a profit, neither losing nor earning money. Calculating the breakeven point is important for determining the viability of a project or investment. Using the present discounted value of future profits is a common method to assess an investment's potential by comparing present costs to the expected stream of future benefits, which is especially useful when the benefits are spread over time.
Present discounted value is not only relevant in finance but also in various scenarios such as infrastructure projects, environmental policies, and even lottery winnings. It is an indispensable analytical tool that allows comparing costs and benefits that occur at different times. When applied to a company's investment decision, such as in the case of a drug company considering research and development (R&D) investments, it enables the determination of the optimal level of investment considering both private and social benefits.