The Cash flOws of a Project Should

question 76

Multiple Choice

The cash flows of a project should:

• A)be computed on a pre-tax basis.
• B)include all sunk costs and opportunity costs.
• C)include all incremental costs, including opportunity costs.
• D)be applied to the year when the related expense or income is recognized by GAAP.
• E)include all financing costs related to new debt acquired to finance the project.

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to what is considered normal or standard in a specific social group.

Asch

Refers to Solomon Asch, the psychologist famous for his research on conformity, including his experiment demonstrating how group pressure can lead individuals to conform to an incorrect answer.

Straight Lines

The simplest form of lines in geometry that extend infinitely in opposite directions without curving.

Social Pressures

The influence exerted by society or social groups on individuals, encouraging them to conform to specific norms or behaviors.