Cash Flows to Be Considered in Capital Budgeting Decisions Generally

question 56

True/False

Cash flows to be considered in capital budgeting decisions generally fall into three major groups: initial investment, incremental operating cash flows, and terminal cash flows.

---

Definitions:

Outstanding Corporate Stock

Shares of a corporation that have been issued and are currently owned by shareholders.

Articles of Incorporation

Legal document filed with a governmental body to legally establish a corporation, detailing its structure, purpose, and regulations.

Certificate of Organization

A legal document filed with a state government to officially form a limited liability company (LLC) within that state.

Corporate Prospectus

A formal document that companies issue to potential investors, detailing the financial health, risks, and objectives of the company, often in the context of a public stock offering.