1. If a firm's sale price per unit decreases, the firm's ________.
variable costs per unit will decrease
operating breakeven point will increase
variable costs per unit will increase
operating breakeven point will decrease
2. Given the following information and ignoring taxes, what is the annual cash revenue that will make the net present value equal to zero (i.e., the annual cash revenue that will cause us to break-even in the financial sense)?
Annual cash costs = $14,000
Life of project = 8 years
Initial cost of project = $30,000
Salvage value at end of project = $2,000
Required rate of return = 15%