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?

A new project has an initial cost of $255,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,300,$18,100, $20,360, $15,200, and $12,000, respectively. What is the average accounting return?

Rossdale Flowers has a new greenhouse project with an initial cost of $337,500 that is expected to generate cash flows of $47,300 for 10 years and a cash flow of $62,700 in Year 11. If the required return is 9 percent, what is the project’s NPV?

A new project has an initial cost of $175,000. The equipment will be depreciated on a straight-line basis to a book value of $67,000 at the end of the four-year life of the project. The projected net income each year is $15,400,$18,150, $23,500, and $15,300, respectively. What is the average accounting return?

You are considering the following two mutually exclusive projects. The crossover rate between these two projects is ___ percent and Project ___ should be accepted if the required return is greaterthan the crossover rate. Year Project A Project B 0 −$ 33,000 −$ 33,000 1 21,000 13,160 2 13,000 11,000 3 13,000 24,500

A project has annual depreciation of $22,700, costs of $97,700, and sales of $143,500. The applicable tax rate is 21 percent. What is the operating cash flow?

The rate of return on which type of security is normally used as the risk-free rate of return?

Combining scenario analysis with sensitivity analysis can yield a crude form of _____ analysis.

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

A 6-year project is expected to generate annual sales of 9,700 units at a price of $84 per unit and a variable cost of $55 per unit. The equipment necessary for the project will cost $381,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $230,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?