The Bottom-Up Approach to Computing the Operating Cash Flow Applies

question 57

Multiple Choice

The bottom-up approach to computing the operating cash flow applies only when:

• A) both the depreciation expense and the interest expense are equal to zero.
• B) the interest expense is equal to zero.
• C) the project is a cost-cutting project.
• D) no fixed assets are required for a project.
• E) both taxes and the interest expense are equal to zero.

---

Definitions:

Conventional CAPM

The Capital Asset Pricing Model, a financial model that describes the relationship between systematic risk and expected return for assets, typically used for pricing risky securities.

Human Capital

The economic value of an individual's skill set and knowledge, which can contribute to their productivity and earnings.

Conditional CAPM

An extension of the Capital Asset Pricing Model that accounts for varying conditions over time or different market environments.

Empirical Returns

Returns that are calculated based on historical data, reflecting the actual gains or losses realized over a specific period.