Which One of the Following Statements Is Correct

question 21

Multiple Choice

Which one of the following statements is correct?

• A)Project analysis should only include the cash flows that affect the income statement.
• B)A project can create a positive operating cash flow without affecting sales.
• C)The depreciation tax shield creates a cash outflow for a project.
• D)Interest expense should always be included as a cash outflow when analyzing a project.
• E)The opportunity cost of a company-owned building that is going to be used in a new project should be included as a cash inflow to the project.

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Definitions:

Hydraulic Fracturing

A technique used in the oil and gas industry to increase extraction rates by injecting fluid into subterranean rocks to create fractures.

Fracking

A process of injecting liquid at high pressure into subterranean rocks, boreholes, etc., to force open existing fissures and extract oil or gas.

Natural Gas

A fossil fuel used primarily for heating, cooking, and electricity generation, consisting mainly of methane and other hydrocarbons.

Equilibrium Price

The price at which the quantity of goods supplied matches the quantity of goods demanded in a market, leading to market stability.