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Project S has a pattern of high cash flows in its early life,while Project L has a longer life,with large cash flows late in its life.At the current required rate of return,normal Projects S and L have identical NPVs.Now suppose interest rates and money costs generally decline.Other things held constant,this change will cause L to become preferred to S.
Constrained Resource
A limited resource that restricts a company's ability to produce goods, offer services, or achieve its objectives.
Contribution Margin
The difference between the sales revenue and variable costs of a product, showing how much revenue contributes towards covering fixed costs and generating profit.
Avoidable Costs
Expenses that can be eliminated if a particular decision is made or if an activity is ceased.
Sunk Costs
Costs that have already been incurred and cannot be recovered, and should not affect future business decisions.
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