Opportunity costs refer to the cost of _____ when evaluating a project's financial viability. overhead costs passing up the next best alternative incremental cash flows sunk costs

passing up the next best alternative

Overhead costs, such as rent and insurance, are _____ and typically not included in the calculation of a project's incremental cash flows. not generally incremental cash flows sunk costs working capital requirements opportunity costs

not generally incremental cash flows

Project Cash Flow Analysis: Incremental Costs, Opportunity Costs, and Financial Evaluation

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Finance - Personal Finance

jake12testoswi Created by 10 mon ago

Cards in this deck(11)

When calculating project free cash flows, it is important to follow guidelines for incremental cash flows. These guidelines help in determining the _____ for project evaluation.

In financial analysis, it is recommended to use _____ instead of accounting profits for a more accurate assessment of a project's value.

Only _____ matter when considering incremental after-tax cash flows, which are calculated as the difference between firm cash flows with and without the project.

The effect on cash flows of other projects, such as cash flows diverted from existing products, is known as _____ effects.

Sunk costs are considered _____ and should not be included in the analysis of a project's incremental cash flows.

Opportunity costs refer to the cost of _____ when evaluating a project's financial viability.

Overhead costs, such as rent and insurance, are _____ and typically not included in the calculation of a project's incremental cash flows.

Working capital requirements include extra inventories and accounts receivable (A/R) and are crucial for determining a project's _____ needs.

Interest payments and other financing costs should be _____ when calculating a project's incremental cash flows.

To calculate a project's free cash flow, one must estimate the project's operating cash flows, working capital requirements, and capital expenditure (CAPEX) requirements. This comprehensive approach ensures accurate _____ calculations.

Working capital (WC) should be determined with and without the project, and it may increase or decrease annually as a percentage of sales. It is assumed that WC is _____ at the termination of the project.

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Project Cash Flow Analysis: Incremental Costs, Opportunity Costs, and Financial Evaluation

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