Chapter 11 mini case The questions A through N are as follows a. should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? should the compny be interested in incremental cash flows, incremental profits, total free cash flows, or total profits. b.How does depriciation afect free cash flows? c. How do sunk cost affect the determination of cash flows? d. What is the projects initial outlay? e. what are the differential cash flows over the project's life? f. What is the terminal cash flow? g. Draw a cash flow diagram for this project. h. what is its new present Value i. What is its internal rate of return? j. should th project be accepted? why or why not? k. In Capital budgeting, risk can be measured from three perspectives. What are those three measure of a projects risk l. According to the CAPM, which measurment of risk is relevant what complictions does reality introdue into the capm vies of risk, and what does that mean for out view of the relevan measure of project risk? m Explain how simulation works what is the value in using a simultion approach. N. What is sensitivity analysis and what is its purpose