The advantages of NPV are all of the following EXCEPT
A) it recognizes the timing of the benefits resulting from the project.
B) it can be used as a rough screening device to eliminate those projects whose returns do not
materialize until later years.
C) it allows the comparison of benefits and costs in a logical manner through the use of time
value of money principles.
D) it provides the amount by which positive NPV projects will increase the value of the firm.
Question 2
Mix Sweet Shop bakes and sells pies. Mix has annual fixed costs of 880,000 and a variable cost per
pie of 7.50. Each pie sells for 15.50 each. The firm expects to sell 500,000 pies annually. What is
the break-even point in pies?
A) 190,440 B) 200,000 C) 280,000 D) 110,000
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