Capital Budgeting Projects Typically Assume That All Cash Flows Transpire

question 96

Multiple Choice

Capital budgeting projects typically assume that all cash flows transpire at the end of the year.The reason for this is that:

• A) less tax liability results from this practice.
• B) balance sheets are prepared at the end of the year.
• C) it simplifies the analysis and the resulting errors are usually small compared with the errors in forecasting future cash flows.
• D) most corporations collect their cash at the end of the year.

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Definitions:

Solution

A homogeneous mixture composed of two or more substances, where the solute is dissolved in the solvent.

Table Salt

A white crystalline substance that gives seawater its characteristic taste and is used for seasoning or preserving food, chemically known as sodium chloride (NaCl).

Water

A clear, flavorless, scentless, and almost colorless substance that is the primary component of the Earth's hydrosphere and the liquids found in every recognized living organism.

Hydrogen Bond

A delicate association between two molecules facilitated by the electrostatic attraction between a proton present in one and an electronegative atom in the other.