In the 4th Year of Project M, Expected Revenues Will

question 87

Multiple Choice

In the 4th year of project M, expected revenues will be $4,750,000, variable costs will be $4,000,000, depreciation expense $180,000, and fixed cash costs $570,000. Which of the following is true?

• A) Accounting income equals $0.00
• B) Free cash flow equals $180,000
• C) Free cash flow equals 0
• D) Both A and B are true.

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Definitions:

Output Level

The quantity of goods or services produced by a company, industry, or economic sector within a given time period.

Economic Rents

Earnings in excess of the minimum necessary to keep a factor of production in its current use, often associated with restricted supply or monopoly power.

Imperfectly Competitive

A market structure where individual firms have some control over the price of their products due to a lack of perfect competition.

Market Price

The current price at which a good or service is bought and sold in a marketplace, determined by supply and demand dynamics.