One Purpose of Identifying All of the Incremental Cash flOws

question 204

Multiple Choice

One purpose of identifying all of the incremental cash flows related to a proposed project is to:

• A) Isolate the total sunk costs so they can be evaluated to determine if the project will add value to the firm.
• B) Eliminate any cost which has previously been incurred so that it can be omitted from the analysis of the project.
• C) Make each project appear as profitable as possible for the firm.
• D) Include both the proposed and the current operations of a firm in the analysis of the project.
• E) Identify any and all changes in the cash flows of the firm for the past year so they can be included in the analysis.

---

Definitions:

Incidental Damages

Additional costs incurred by one party due to another party's breach of contract, which are recoverable under the law.

Purchase Price

The amount of money paid to buy something, including goods, services, or real estate.

Sue

To initiate legal proceedings against an individual or entity, claiming they have committed a wrong or breach of contract.

Defective Parts

Components or elements that have flaws or imperfections which prevent them from functioning as intended.