8. If net present value is 0, then: O a project is at its breakeven point O the

Question

8. If net present value is 0, then: O a project is at its breakeven point O the forecast must be in error O the payback period must be less than one year O the project should be killed O none of the above 5 points 9. Criteria to consider when setting a new product's price include all of the following except: O Profitability for the channels O Profitability for the firm launching the new product O Fixed costs of corporate headquarters O Prices of alternative products and brands O Surveys and concept tests with target consumer 5points

Explanation / Answer

8. a. project is at its breakeven point. Because net present value gives you the value of money in the present with contrast to some future value, and being zero indicates that in future also the profitability of the project will be zero.

Formula for NPV= (present value of future cash flow of project – present value of cost incurred to   project).

9. c. Fixed costs of corporate headquarters: the fixed costs is often not included while setting the price as the price is set with respect to variable cost and the price which customer is willing to pay.

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