HIGHLIGHT ANSWER

1. What is the accounting break-even level of revenues for a firm with $6 million in sales, variable costs of $3.9 million, fixed costs of $1.2 million, and depreciation of $1 million? A. $6,285,714 B. $6,557,377 C. S6, 100,000 D. $3,428,571 2. A project that increased sales was accompanied by a $50,000 increase in inventory, a $20,000 increase in accounts receivable, and a $25,000 increase in accounts payable. Assuming these amounts remain constant, by how much has net working capital increased? A. $5,000 B. $30,000 C. $45,000 D. $25,000 3. If a project has a cost of $50,000 and a profitability index of 0.4, then: A. its cash inflows are $70,000. B. the present value of its cash inflows is $30,000. B. its inflow is 20%. C. its NPV is $20,000. 4. What is the amount of the annual depreciation tax shield for a firm with $200,000 in net incom $75,000 in depreciation expense, and a 35% marginal tax rate? A. $75,000 B. $26,250 C. $70,000 D. 43,750