Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A) An asset that is sold for less than book value at the end of a project's life will generate a loss for the firm and will cause an actual cash outflow attributable to the project.
• B) Only incremental cash flows are relevant in project analysis and the proper incremental cash flows are the reported accounting profits because they form the true basis for investor and managerial decisions.
• C) It is unrealistic to expect that increases in net working capital that are required at the start of an expansion project are simply recovered at the project's completion.Thus,these cash flows are included only at the start of a project.
• D) Equipment sold for more than its book value at the end of a project's life will increase income and,despite increasing taxes,will generate a greater cash flow than if the same asset is sold at book value.
• E) All of the above are false.

---

Definitions:

Precious Metals

Rare, naturally occurring metallic elements of high economic value, which are often used as investment commodities, jewelry, and in industrial applications.

Paper Dollar

A term referring to United States currency notes made of paper, as opposed to coins or digital currency.

Collectibles

Items of personal or aesthetic value, often rare or unique, that are sought after and collected by enthusiasts.

Reserve Ratio

The reserve ratio is the portion of depositors' balances that banks must have on hand as cash, determined by central banks to ensure stability and liquidity.