You Are Considering a Project That You Believe Is Quite

question 131

Multiple Choice

You are considering a project that you believe is quite risky. To reduce any potentially harmful results from accepting this project, you could:

• A) Lower the degree of operating leverage.
• B) Lower the contribution margin.
• C) Increase the initial cash outlay.
• D) Increase the fixed costs per unit while lowering the contribution margin.
• E) Lower the operating cash flow of the project.

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Definitions:

Resources Improvements

Enhancements or upgrades to the inputs used in the production process, including technology, labor skills, and machinery, leading to increased efficiency or productivity.

Technology Increase

Refers to advancements or improvements in technology that enhance productivity or efficiency.

Comparative Advantage

The capability of an entity, whether it be a person, company, or nation, to create a good or offer a service more efficiently, in terms of opportunity cost, than competitors.

Opportunity Costs

The value of the best alternative forgone in making any decision.