choose the correct answer :

1. All of the following Influence capital budgeting cash flowsEXCEPT:

_ accelerateddepreciation

_ salvage value

_ tax ratechanges

_ method of projectfinancing used

2. In proper capital budgeting analysis we evaluateincremental

_ accounting income

_cash flow

_earnings

_ operatingprofit

3. The estimated benefits from a project are expressed as cashflows instead of income flows because:

_ it issimpler to calculate cash flows than income flows

_ it is cash,not accounting income, that is central to the firm's capitalbudgeting decision

_ this is requiredby the Internal Revenue Service

_ this isrequired by the Securities and Exchange Commission

4. ln estimating nafter-tax incremental operating cash flows" fora project, you should include all of the following EXCEPT:

--- sunk costs

_ opportunity cost

_ changes In working capital resulting from the project, net ofspontaneous changes in C/L effects of inflation

5. A capital investment is one that

_ hastheprospect of Jong term benefits

_ has theprospect of short term benefits

_ is onlyundertaken by large corporatiOns

_ applies onlyto investment in fixed assets

Answer rating: 100% (QA)

1 the project finance approach employed Cash flows are an issue in capital budgeting Faster tax savi... View the full answer