Which One of the Following Is a Reason Why Managers

question 169

Multiple Choice

Which one of the following is a reason why managers may utilize more than one method when analyzing a project?

• A) To determine a guaranteed rate of return on a projected project.
• B) To better understand the conditions under which the project can be successful.
• C) To ensure that the projected cash flows are accurate.
• D) Because there are multiple methods of analysis with basically no associated disadvantages.
• E) Because each of the five primary analytical methods is based on completely different data related to a proposed project.

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Definitions:

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of an entity.

Operations

Refers to the ongoing activities of a business that are involved in the production and distribution of products or services.

Indirect Method

A method of reporting cash flows from operating activities by adjusting net income for changes in non-cash accounts.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used.