One Purpose of Identifying All of the Incremental Cash Flows

question 95

Multiple Choice

One purpose of identifying all of the incremental cash flows related to a proposed project is to:

• A) Isolate the total sunk costs so they can be evaluated to determine if the project will add value to the firm.
• B) Eliminate any cost which has previously been incurred so that it can be omitted from the analysis of the project.
• C) Make each project appear as profitable as possible for the firm.
• D) Include both the proposed and the current operations of a firm in the analysis of the project.
• E) Identify any and all changes in the cash flows of the firm for the past year so they can be included in the analysis.

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Definitions:

Robust Dimensions

Refers to the characteristic or attribute of a system, process, or product that maintains its functionality under various conditions, denoting strength and reliability.

Stability

Steadiness and firmness of purpose; a leadership quality required for making good judgments and generating the trust and confidence of others.

Generosity

The quality of being kind, understanding, and not selfish; the willingness to give or share unselfishly.

Peacefulness

The state of being calm, tranquil, and free from conflict or disturbance.