The Most Important Issues to Consider in Financial Feasibility Analysis

question 51

Multiple Choice

The most important issues to consider in financial feasibility analysis are: financial performance of similar businesses, total cash needed, and ________.

• A) the projected internal rate of return of the proposed venture
• B) the projected years to an IPO or an acquisition for the proposed venture
• C) management prowess
• D) overall attractiveness of the proposed venture
• E) the projected borrowing power of the proposed business

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Definitions:

Lost Contribution Margin

The amount of income forgone from not selling additional units, calculated as the unit selling price minus variable costs.

Home Security Division

A specialized unit of a company that focuses on producing and selling home security products and services.

Idle Capacity

Refers to the unused production capacity of a company, where equipment and resources are not being used to their full potential due to insufficient demand or operational inefficiencies.

Fixed Costs

Costs that remain constant in total amount regardless of fluctuations in activity level within a relevant period.