The Present Value of the Expected Net Cash Inflows for a Project

question 65

Multiple Choice

The present value of the expected net cash inflows for a project will most likely exceed the present value of the expected net profit after tax for the same project because

• A) Income is reduced by taxes paid,but cash flow is not.
• B) There is a greater probability of realizing the projected cash flow than the forecasted income.
• C) Income is reduced by dividends paid,but cash flow is not.
• D) Income is reduced by depreciation charges,but cash flow is not.
• E) Cash flow reflects any change in net working capital,but sales do not.

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Definitions:

Prescription

A direction, usually written, by a qualified health-care professional for the preparation and use of a medicine or remedy.

Grant

To agree to give or allow something requested to someone, often in the context of financial aid, rights, or property.

Real Property

Land and anything permanently attached to it, such as buildings and structures, distinct from personal property or movable possessions.

Tenancy

General term indicating a possessory interest in property. In landlord–tenant law, a property owner’s conveyance to another person of the right to possess the property exclusively for a period of time.