Homework Answers
1)
Opportunity costs are the relevant cash flows of the project. All the relevant cash flows must be considered as incremental or decremental cash flows while evaluating project decisions.
Hence, correct option is “opportunity costs”.
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D l Question 1 When calculating incremental cash flows, we should include O interest O financing...
1. When determining relevant cash flows for project evaluation, we should _____. a. discount interest expenses...
1. When determining relevant cash flows for project evaluation, we should _____. a. discount interest expenses to the present b. subtract interest expenses from EBIT c. ignore interest expenses d. add back in interest expenses after subracting taxes 2. When calculating incremental cash flows, we should exclude _____. a. side effects b. taxes c. opportunity costs d. sunk costs 3. When calculating incremental cash flows, we should include _____. a. interest b. sunk costs c. financing expenses d. opportunity costs...
Part 1 When calculating incremental cash flows, we should exclude _____. A. sunk costs B. side...
Part 1 When calculating incremental cash flows, we should exclude _____. A. sunk costs B. side effects C. opportunity costs D. taxes
Which of the following is a basic principle when estimating a project's cash flows? Cash flows...
Which of the following is a basic principle when estimating a project's cash flows? Cash flows should be measured on a pretax basis accounting for the risk of individual projects Cash flows should ignore depreciation because it is a noncash charge Only direct effects of a project should be included in cash flow calculations Cash flows should be measured on an incremental basis D 4. In estimating the net investment, an outlay that has already been made is known as...
QUESTION 2 Depreciation must be considered when evaluating the incremental operating cash flows associated with a...
QUESTION 2 Depreciation must be considered when evaluating the incremental operating cash flows associated with a capital budgeting project because: A. it represents a tax-deductible cash expense. B. the firm has a cash outflow equal to the depreciation expense each year. C. depreciation is a cash flow that doesn't change. D. depreciation has an impact on the taxes paid by the firm, which is a cash flow. E. depreciation is a sunk cost. QUESTION 3 Diversifiable risk includes _____. A....
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
Ch 13: Assignment - Capital Budgeting: Estimating Cash 3. Identifying incremental cash flows When firms make...
Ch 13: Assignment - Capital Budgeting: Estimating Cash 3. Identifying incremental cash flows When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's depreciation expense The project's fixed-asset expenditures The project's financing costs Changes in net working capital associated with the project Indirect cash flows often affect a...
QUESTION 12 Opportunity costs should be included in the analysis of a project. True False QUESTION...
QUESTION 12 Opportunity costs should be included in the analysis of a project. True False QUESTION 13 Sunk costs are considered cash flows of a project. True False QUESTION 14 The crossover point is defined as the discount rate that: Indicates the point where the IRR equals zero as IRR moves in a downward direction. Causes the net present value of a project to equal zero. Causes the IRR of one project to exceed the IRR of a second project....
Which of the following criteria should be used to choose a project if there is a...
Which of the following criteria should be used to choose a project if there is a conflict between two mutually exclusive projects? A. The project whose payback period is equal to the expected years required to recover the original investment should be chosen. B. The project whose internal rate of return is higher than its modified internal rate of return should be chosen. C. The project whose discounted payback period is longer than its traditional payback period should be chosen....
Which of the following is a basic principle when estimating a project's cash flows? Cash flows should be measured on a pretax basis accounting for the risk of individual projects Cash flows should ignore depreciation because it is a noncash charge Only direct effects of a project should be included in cash flow calculations Cash flows should be measured on an incremental basis D 4. In estimating the net investment, an outlay that has already been made is known as...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
Ch 13: Assignment - Capital Budgeting: Estimating Cash 3. Identifying incremental cash flows When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's depreciation expense The project's fixed-asset expenditures The project's financing costs Changes in net working capital associated with the project Indirect cash flows often affect a...
QUESTION 12 Opportunity costs should be included in the analysis of a project. True False QUESTION 13 Sunk costs are considered cash flows of a project. True False QUESTION 14 The crossover point is defined as the discount rate that: Indicates the point where the IRR equals zero as IRR moves in a downward direction. Causes the net present value of a project to equal zero. Causes the IRR of one project to exceed the IRR of a second project....
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