This Is a Principle of Capital Budgeting Which States That

question 101

Multiple Choice

This is a principle of capital budgeting which states that the calculations of cash flows should remain independent of financing.

• A) generally accepted accounting principle
• B) financing principle
• C) separation principle
• D) WACC principle

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Definitions:

Efficient

The optimal use of resources to achieve the desired ends with minimal waste or effort, often related to production and allocation.

Economy

A system by which goods and services are produced, distributed, and consumed.

Long-Run Equilibrium

A situation in which all firms in a market are making zero economic profit, leading to a stable market condition where no new firms enter or exit.

Consumer Preference

The subjective tastes and preferences of consumers, which determine the demand for different goods and services.