Which of the Following Statements Is True Regarding Cash Flows

question 15

Multiple Choice

Which of the following statements is true regarding cash flows that a firm must estimate to decide if it should go ahead with a project?

• A)In most cases,the cash flows will be positive at first,because the firm is yet to invest heavily in production facilities.
• B)After some initial period the cash flows becomes negative as investment costs increase and revenues stabilize.
• C)Once the cash flows have been estimated,they must be discounted to determine their net present value using an appropriate discount rate.
• D)If the net present value of the discounted cash flows is less than zero,the firm should go ahead with the project.

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Definitions:

Traffic Flow

The movement of vehicles along roads and streets, as analyzed to improve efficiency and reduce congestion.

Computer Crashed

A sudden malfunction or failure of a computer system, leading to an inability to operate properly or access data.

Files Okay

An affirmation that documents or digital files are acceptable or in good order.

GPS

Stands for Global Positioning System, a satellite-based navigation system that provides location and time information anywhere on or near the Earth.