One Purpose of Identifying All of the Incremental Cash Flows

question 16

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.

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Definitions:

Contact Hypothesis

A theory suggesting that under certain conditions, interpersonal contact is one of the most effective ways to reduce prejudice between majority and minority group members.

Confirmation Bias

A tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Prejudiced

Holding preconceived opinions or judgments about someone or something without proper knowledge, often based on stereotypes or bias.

Biased Judgments

Assessments or decisions influenced by personal preferences, prejudices, or insufficient information.