Cash Flows Used in NPV and IRR Analyses Include All

question 61

Multiple Choice

Cash flows used in NPV and IRR analyses include all of the following EXCEPT:

• A)future cost savings.
• B)future increased sales.
• C)residual value.
• D)depreciation expense.

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Definitions:

Estimated Overhead Cost

Estimated overhead cost refers to the projected expenses related to manufacturing overhead or indirect costs that are expected to be incurred over a specified period.

Predetermined Overhead Rates

A rate calculated prior to the accounting period that is used to apply manufacturing overhead costs to products or job orders, based on an estimated amount of allocation base.

Accounting Period

A specific period of time used for financial reporting and analysis, often a quarter or a year.

Estimates

Approximations used in accounting when precise data is unavailable, often used for calculating allowances for doubtful accounts or depreciation.