You Are Analyzing a Project That Is Equivalent to Borrowing

question 15

Multiple Choice

You are analyzing a project that is equivalent to borrowing money.This project's:

• A) NPV graph rises as discount rates decrease.
• B) initial cash flow is an outflow of funds.
• C) value increases when the cost of capital increases.
• D) acceptance requires its IRR to exceed the cost of capital.

---

Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used by companies to manage liquidity and ensure sufficient cash on hand.

Control Purposes

The use of various management and accounting mechanisms to monitor, manage, and optimize the performance and efficiency of an organization.

Sales Forecasts

Sales forecasts are predictions of future sales volumes, often based on historical sales data, market analysis, and anticipated market changes.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, typically used to assess liquidity and manage cash flow.