Which of the Following Statements Is the Correct Treatment of Finance

question 24

Multiple Choice

Which of the following statements is the correct treatment of finance charges in project evaluation?

• A)Finance charges should be included in a project's net cash flows and in the discount rate.
• B)Finance charges should be included in a project's net cash flows and excluded from the discount rate.
• C)Finance charges should be excluded from a project's net cash flows and included in the discount rate.
• D)None of the given options.

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Definitions:

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business.

Income Statement

A financial report that shows a company's revenues, expenses, and profits over a specific period, highlighting operational efficiency.

Contributed Capital

The total value of the cash and other assets received by a company from its shareholders in exchange for shares of stock.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, highlighting net profit or loss.