Part I: Choose the one alternative that best completes the statement or answers the question. (5 Points; 2.5 Points bonus) (ILOS: A1 and C2) 1) Which one of the following is an example of a sunk cost? A) $1,200 paid to repair a machine last year B) $1,500 of lost sales because an item was out of stock C) $1,800 increase in comic book sales if a store ceases selling puzzles D) $4,500 reduction in current shoe sales if a store commences selling sandals 2) Net working capital: A) can be ignored in project analysis because any expenditure is normally recouped at the end of the project. B) is the only expenditure where at least a partial recovery can be made at the end of a project. C) can generate either an initial cash inflow or outflow, D) is rarely affected when a new product is introduced. 3) The change in variable costs that occurs when production is increased by one unit is referred to as the A) average cost. B) marginal cost. C) scenario cost. D) net cost. 4) Which one of the following is the relationship between the percentage change in operating cash flow and the percentage change in quantity sold? A) Contribution margin B) Degree of sensitivity C) Cash break-even D) Degree of operating leverage 5) The expected risk premium on a stock is equal to the expected return on the stock minus the: A) expected market rate of return. B) risk-free rate. C) variance. D) inflation rate. 6) Unsystematic risk: A) is compensated for by the risk premium. B) is measured by standard deviation. C) can be effectively eliminated by portfolio diversification. D) is measured by beta