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:

Annual Revenues

The total amount of money received by a company for goods sold or services provided during a fiscal year.

Net Income

The concluding profit figure for a company, arrived at by deducting every type of expense and tax from its complete revenue.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense since it was put into use, reflecting usage or wear and tear.

Service Fees Earned

Service fees earned refer to revenues a company generates from providing services to clients or customers, as opposed to selling physical goods.