The Bottom-Up Approach to Computing the Operating Cash Flow Applies

question 79

Multiple Choice

The bottom-up approach to computing the operating cash flow applies only when:

• A)both the depreciation expense and the interest expense are equal to zero.
• B)the interest expense is equal to zero.
• C)the project is a cost-cutting project.
• D)no fixed assets are required for the project.
• E)taxes are ignored and the interest expense is equal to zero.

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Definitions:

Compensation

A broad term referring to the combination of salaries, wages, benefits, and other forms of value provided to employees for their services.

Private Bargaining

The process through which individual parties negotiate terms and conditions exclusively among themselves without the intervention of external regulations.

Efficient Outcome

An optimal allocation of resources that results in the highest possible satisfaction or utility with the least waste or inefficiency.

Externality

A consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices.