The $20,000 per year benefit that would accrue to the existing lawn maintenance service only if the new lawn care service is implemented is best described as a:

options:

	Opportunity cost
	Incremental cash flow2
	Externality
	Sunk cost

Part B

Which of the following is most consistent with using debt to reduce agency costs or conflicts?

options:

	The interest paid on debt reduces taxable income and income taxes
	Increasing debt reduces a firms business risk
	The issuance of debt helps firms increase their credit rating
	The interest paid on debt reduces cash that management of a firm might otherwise waste or use poorly

Part C

Firms with higher operating breakeven points are typically considered to be exposed to greater business risk.

options:

	True
	False