1. Operating leverage is best described as

a. taking out a debt as opposed to not taking on any debt

b. the degree to which fixed costs magnify the effect on profits of a shortfall in sales

c. Financing using only common equity

d. financing using the retained earnings of the business

2. Project analysis, beyond simply calculating Net Present Value (NPV), includes the following procedures EXCEPT

a. frequency analysis

b. sensitivity analysis

c. scenario analysis

d. break-even analysis

3. You obtain the following data for year 1: Revenue = $1000; Variable costs = $600; Depreciation = $300; Tax rate = 25 percent.

Based on this information the operating cash flow for the project in year 1 is ____?