Question

A company planning to market a new model of motor scooter analyzes the effect of changes in the selling price of the motor​ scooter, the number of units that will be​ sold, the cost of making the motor​ scooter, the effect on Net Working​ Capital, and the cost of capital for the project. They predict that the breakminuseven point for sales price for the motor scooter is​ $2,480. What does this​ mean?

Answer 1

A. If the motor scooter is sold for $2.480, then the net present value (NPV) for the product will be zero.

Step-by-step explanation:

As we believe that The break even point is the point where the organization has no income gained and no loss incurred While the present net value is the value that determines whether or not the projects will be approved after considering the discounted cost.

It means that if the original investment is less than the present value then the proposal is otherwise refused, the break even point is where the net present value is zero

Hence, the first option is correct