Which of the Following Factors Should Be Included in the Cash

question 56

Multiple Choice

Which of the following factors should be included in the cash flows used to estimate a project's NPV?

• A) Interest on funds borrowed to help finance the project.
• B) The end-of-project recovery of any working capital required to operate the project.
• C) Cannibalization effects, but only if those effects increase the project's projected cash flows.
• D) Expenditures to date on research and development related to the project, provided those costs have already been expensed for tax purposes.
• E) All costs associated with the project that have been incurred prior to the time the analysis is being conducted.

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Definitions:

Self-Serving Bias

A cognitive bias that involves taking personal credit for success while blaming external factors for failures.

Bystander Effect

A social psychological phenomenon in which individuals are less likely to offer help to a victim when other people are present.

Actor-Observer Effect

The tendency to attribute one's own actions to external factors, while attributing others' actions to their personality.

Primacy Effect

The psychological phenomenon whereby the first items presented in a list are remembered more easily than those in the middle.