You are evaluating a project and are concerned about the reliability of the cash flow forecasts. To reduce any potentially harmful results from accepting this project, you should consider:

Multiple Choice

• increasing the fixed costs per unit.

• increasing the initial cash outlay.

• lowering the contribution margin per unit.

• lowering the operating cash flow.

• lowering the degree of operating leverage.

• Which of the following values will be equal to zero when a project is operating at the accounting break-even level of output?

  Multiple Choice

• OCF and NPV

• IRR and OCF

• IRR and net income

• Net income and contribution margin

• Net income and NPV

• A project has expected sales of 63,000 units, 4 percent; variable costs per unit of $84, 5 percent; fixed costs of $287,000, 1 percent; and a sales price per unit of $219, 2 percent. The depreciation expense is $53,000 and the tax rate is 23 percent. What is the contribution margin per unit for a sensitivity analysis using a variable cost per unit of $85?

  Multiple Choice

• $135

• $132

• $133

• $134

• $136