Assume That During the Year, the Cui Company Had Net

question 38

Multiple Choice

Assume that during the year, the Cui Company had net income of $100,000. One of the expenses that was included in the computation of net income was depreciation expense of $3,000. The company also had a gain on the sale of investment property of $4,000. Based on this information, net operating cash flows for the year equal

• A) 93000
• B) 99000
• C) 101000
• D) 107000

Understand the importance of differentiating between earnings and cash flows for project projections.

Recognize the redundancy of including financing costs in cash flow estimates.

Comprehend the principle of incremental cash flow in evaluating projects and its focus on both positive and negative impacts.

Understand the irrelevance of sunk costs and the relevance of taxes in capital budgeting decisions.

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