Which of the Following Statements Is Most Correct

question 20

Multiple Choice

Which of the following statements is most correct?

• A) Variable costs are expenses that do not change if sales revenues rise.
• B) A firm can reduce project risk by increasing the sensitivity of EBITDA to revenue changes.
• C) A project that has a higher proportion of fixed costs will have cash flows that are more sensitive to changes in revenues than an otherwise identical project with a lower proportion of fixed costs.
• D) An investment in new manufacturing equipment that will automate a production process would be an example of a variable cost.

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Definitions:

Ripeness

A measure of the readiness of a case for a decision to be made; designed to prevent premature litigation for a dispute that is insufficiently developed. A claim is not ripe for litigation if it rests on contingent future events that may not occur as anticipated or may not occur at all.

Moot

Moot refers to an issue that has been resolved or has become irrelevant, thus, no longer requiring a decision to be made by a court.

Concurrent Federal Jurisdiction

involves cases where both the federal and state courts have the authority to hear the same case.

Federal Courts

Courts established by the federal government that have jurisdiction over matters specifically granted them by the U.S. Constitution and federal statutes.