Which of the following statements is most correct?
A) Variable costs are expenses that do not change if sales revenues rise.
B) A firm can reduce project risk by increasing the sensitivity of EBITDA to revenue changes.
C) A project that has a higher proportion of fixed costs will have cash flows that are more sensitive to changes in revenues than an otherwise identical project with a lower proportion of fixed costs.
D) An investment in new manufacturing equipment that will automate a production process would be an example of a variable cost.
Correct Answer:
Verified
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