If in Evaluating a Proposal by Use of the Net

question 85

True/False

If in evaluating a proposal by use of the net present value method there is a deficiency of the present value of future cash inflows over the amount to be invested, the proposal should be rejected.

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Definitions:

Amortization

The process of spreading the cost of an intangible asset over its useful life.

Investing Activities

Financial actions related to acquiring or disposing of long-term assets and investments, a component of a company's cash flow statement.

Indirect Method

A technique used in cash flow statements to convert net income into net cash flow from operating activities, by adjusting for non-cash transactions.

Direct Method

A cash flow statement approach that involves listing all major operating cash receipts and payments to calculate net cash from operating activities.