Question

12. generally speaking, our projected overall cash flows for the purposes of finding a project NPV (i.e, C0, C1, C2, etc.) should include:

a. interest payments on long term debt ised to finance the project, but not the repayment of principal

b. incremental common stock dividends we anticipate paying associated with this project

c. none of the above

Answer 1

The answer is

c.None of the above

The cash paid for interest payments as well as principal repayments are included in the cash flows analysis since it is an outflow of cash

The stock dividend is not included as it is a distribution of income and should not affect the NPV of project