The Option to Abandon a Project Inexpensively Is Likely to Have

question 118

Multiple Choice

The option to abandon a project inexpensively is likely to have more value when the product:

• A) incurs high fixed costs of production.
• B) incurs high variable costs of production.
• C) generates a positive NPV.
• D) has a steady degree of operating leverage.

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Definitions:

Proportion

A mathematical ratio indicating the relationship in quantity, amount, or size between parts of a whole.

Nominal

Pertaining to data that can be categorized but not ranked or ordered; involves naming or labeling attributes.

Ordinal

Pertaining to a scale or series that denotes order but not relative size or degree.

Interval

A range between two numbers or points, often used to describe the range in a set of data or the domain of a function.