With the existence of fixed operating costs, a decrease in sales will result in ________ in EBIT.

Select one:

a. a more than proportional increaseb. a less than proportional increasec. a proportional increased. an equal increase

The Garcia Company is using net present value (NPV) analysis to determine whether or not to

invest in a project costing $3 million. The Company will finance the project by issuing new debt.

How will the interest payments on the debt be incorporated into the NPV cash flow analysis?

Select one: a. the interest payments will be an operating cash outflow b. the interest payments will be an initial cash outflow c. the interest payments will be a terminal cash outflow d. the interest payments will not be considered in the NPV cash flow analysis