A business analyst (BA) is assessing the different solution proposals. What type of financial calculation would the BA use to determine which solution is worth investing in based on its breakeven point?
A business analyst (BA) is assessing the different solution proposals. What type of financial calculation would the BA use to determine which solution is worth investing in based on its breakeven point?
The internal rate of return (IRR) is the financial calculation used to determine the breakeven point of an investment. It represents the interest rate at which the net present value (NPV) of all cash flows (both positive and negative) from a project or investment equals zero. By calculating the IRR, a business analyst can assess whether the expected return meets or exceeds the required rate of return, thus determining if the solution is worth investing in.
Ans-A Explanation- The internal rate of return (IRR) is the interest rate at which an investment breaks even, and is usually used to determine if the change, solution or solution approach is worth investing in.(BABOK page-278)
ANs is A The internal rate of return (IRR) is the interest rate at which an investment breaks even, and is usually used to determine if the change, solution or solution approach is worth investing in.
Yes, A
PG 278 & 279 Based on BABOK V3, the most appropriate financial calculation for determining which solution is worth investing in based on its breakeven point is: D. Net Present Value Net Present Value (NPV) is the present value of the benefits minus the original cost of the investment. NPV helps in comparing different investments and different benefit patterns in terms of present-day value. The breakeven point is the point at which the NPV becomes zero, indicating that the benefits equal the costs. Therefore, by calculating the NPV for each solution proposal, the business analyst can determine which one reaches the breakeven point sooner or has a higher NPV, indicating a better investment.
Internal Rate of Return The internal rate of return (IRR) is the interest rate at which an investment breaks even, and is usually used to determine if the change, solution or solution approach is worth investing in.
The break-even point can be calculated in terms of Net Present Value (NPV). The financial break-even occurs at a point when the cash flows are equivalent to the initial investments; this is possible only when the NPV is zero. IRR, on the other hand is the break even rate. My conclusion, question is poorly worded.
The question do not mention to calculate the interest rate, but only do choose the better investment. So, answer D (Net Present Value) is the right one. The higher the NPV, the better the investment (BABOK 10.20.3.5)
Final answer is A -> IRR
Ans A 10.20.3 The internal rate of return (IRR) is the interest rate at which an investment breaks even, and is usually used to determine if the change, solution or solution approach is worth investing in.
although any of the four options can be used, the keyword is the breakeven point. net present value -D is the right answer