Chapter 11 (Finance)

the accounting break-even point.

A project that has a payback period exactly equal to the project's life is operating at:

Sensitivity

An analysis of the change in a project's NPV when a single variable is changed is called _____ analysis.

Decrease the labor hours per unit produced

Andrea is analyzing a project that currently has a projected NPV of zero. Which one of the following changes that she is considering is most apt to cause that project to produce a positive NPV instead? Consider each change independently.

IRR equals the required return.

Assume both the discount and tax rates are positive values. At the financial break-even point, the:

The slope of the function measures the sensitivity of the net present value to a change in sales quantity.

Assume you graph a project's net present value given various sales quantities. Which one of the following statements is correct regarding the resulting function?

wide range of values to multiple variables simultaneously

Simulation analysis is based on assigning a _____ and analyzing the results.

facing hard rationing.

The CFO of Shelby & Muhammad receives frequent capital funding requests from the firm's division managers. These requests are seeking funding for positive net present value projects. The CFO continues to deny all funding requests due to the financial situation of the company. Apparently, the company is:

sales price per unit minus the variable cost per unit.

The contribution margin per unit is equal to the:

1 + FC/OCF

The degree of operating leverage is equal to:

soft rationing.

The procedure of allocating a fixed amount of funds for capital spending to each business unit is called:

vary directly with sales.

Variable costs can be defined as the costs that:

cash break-even point.

When the operating cash flow of a project is equal to zero, the project is operating at the:

worst-case scenario analysis.

When you assign the lowest anticipated sales price and the highest anticipated costs to a project, you are analyzing the project under the condition known as:

Operating cash flow per unit and contribution margin per unit

Which of the following are inversely related to variable costs per unit?

IRR and net income

Which of the following values will be equal to zero when a project is operating at the accounting break-even level of output?

High variable costs relative to the fixed costs

Which one of the following characteristics best describes a project that has a low degree of operating leverage?

Degree of operating leverage

Which one of the following is the relationship between the percentage change in operating cash flow and the percentage change in quantity sold?

Increasing the sales price and decreasing the variable cost per unit

Which one of these combinations must increase the contribution margin?