What financial valuation technique can the business analyst use to determine the breakeven point for the project?

A business analyst is studying the cost of the endeavor in relation to the projected income the endeavor will bring once the project is completed.

What financial valuation technique can the business analyst use to determine the breakeven point for the project?
A . Payback period
B . Average rate of return
C . Cost-benefit analysis
D . Discounted cash flow

View Answer

Answer: A

Explanation:

Payback period quantifies the duration that the project will need to exist and generate revenue in order to pay back the original investment of the project. The payback period is also known as management horizon or the breakeven point.

Answer B is incorrect. Average rate of return describes the rate of return the project will create.

Answer C is incorrect. Cost-benefits analysis describes the relation of costs to benefits in a project.

Answer D is incorrect. Discounted cash flow describes the future value on the investment of the project.