When Evaluating an Investment Project,which of the Following Best Describes

question 71

Multiple Choice

When evaluating an investment project,which of the following best describes the financial information needed by the decision maker?

• A) after-tax accounting profits
• B) after-tax incremental cash flows to the company as a whole
• C) incremental cash flows before taxes so the decision will not be biased by a tax code that may change in the future
• D) pre-tax accounting profits adjusted for any accounting method changes

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Definitions:

Equity Repurchases

The process by which a company buys back its own shares from the marketplace, reducing the amount of outstanding stock.

New Equity Sales

New equity sales refer to the process of issuing new shares of stock to investors in order to raise capital for the corporation.

Cash Flow From Assets

The total amount of cash generated by a company’s main business operations, available for debt servicing, dividend payments, and reinvestment in the firm.

Operating Cash Flow

Operating cash flow is the cash generated from the normal operations of a business, reflecting the company's ability to generate sufficient cash to maintain and expand operations.