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:

Corporations

Legal entities that are separate from their owners, providing limited liability protection, and have the ability to raise capital by issuing shares.

19th Century

The period from January 1, 1801, to December 31, 1900, marking the nineteenth century of the Gregorian calendar.

Gross Investment

The sum of money used to acquire new capital assets, not considering depreciation expenses.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country’s borders in a specific time period, used as a broad measure of economic performance.