Blumberg Industries Has Just Completed Its Analysis of a Proposed

question 60

Multiple Choice

Blumberg Industries has just completed its analysis of a proposed project. The results show that if the project is accepted, the firm will lose an amount of money which is exactly equal to their initial investment in the project. This means that:

• A) The firm should accept the project as long as they are confident of the assumptions used in the analysis.
• B) The fixed costs per unit are exactly equal to the contribution margin at the projected level of sales.
• C) Sales are estimated at the financial break-even point.
• D) The estimated cash flow is equal to the depreciation expense.
• E) The project has a discounted payback period exactly equal to the life of the project.

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Definitions:

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