1. Suppose you consider projects A and B that have different cost structures. Both projects produce and sell the same product. Both projects have the same positive operating cash flows at quantity of sales of 20 units. Project A has higher fixed costs but lower variable costs than B.Both fixed and variable costs are non zero.

   Next year both projects will sell quantity of 30 units of product. Which of the following is true?

   I. Project A will likely have higher OCF than project B if, indeed, quantity of sales increases?

   II. Project B will likely have higher OCF than project A if, indeed, quantity of sales increases?

   III Project A has higher degree of operating leverage than project B at quantity of 20?

   		III only
   		I only
   		I and III only
   		II and III only
   		II only