1. A firm requiring an input in the future for production can lock in the cost of this input by selling a futures contract.

True

False

2. If one takes into consideration the option to abandon the project in the future the NPV of the project at the beginning might be higher.

True

False

3. Builtrite's upper management has been comparing their books to industry standards and came up with the following question: Why is our operating profit margin higher than the industry standard and our earnings before taxes margin lower than the industry standard?

Builtrite has lower than average operating expenses

Builtrite has higher than average operating expenses

Builtrite has lower than average interest expense

Builtrite has higher than average interest expense