Common-size statements show the relationship of the component parts to a total in a single statement.

Elasticity of demand = (percentage change in quantity)/(percentage change in price). Thus, since elasticity is known to be 0.5, a 20% change in price must result in a 10% change in quantity demanded. Since demand is inelastic, a rise in price will cause total revenues to increase.

Information availability contributes to the degree of efficiency.

If the cumulative cash in one year equals the outlay and additional cash flows are not very large, this scenario is possible. e.g. initial outlay = 100, first year cash flow = 100 and second year cash flow = 5. The required rate of return is 10%. This project would have a payback period of 1 year, an NPV of -4.96 and an IRR of 4.77%.