Which of the Following Factors Should Be Included in the Cash

question 35

Multiple Choice

Which of the following factors should be included in the cash flows used to estimate a project's NPV?

• A) All costs associated with the project that have been incurred prior to the time the analysis is being conducted.
• B) Interest on funds borrowed to help finance the project.
• C) The end-of-project recoof any working capital required to operate the project.
• D) Cannibalization effects, but only if those effects increase the project's projected cash flows.
• E) Expenditures to date on research and development related to the project, provided those costs have already been expensed for tax purposes.

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Definitions:

Term to Maturity

The remaining time until a debt security, such as a bond, reaches its repayment date at which point the principal is repaid to investors.

Coupon

In finance, a coupon refers to the interest payment received by a bondholder from the bond's issuer at specified intervals.

Market Rate of Return

The average rate of return of investments in the market over a specific period.

Coupon Bonds

Bonds that pay the holder a fixed interest payment (coupon) periodically until the maturity date, at which point the principal is repaid.