Which of the Following Statements Is False

question 33

Multiple Choice

Which of the following statements is false?

• A) Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
• B) To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.
• C) Estimates of the cash flows and cost of capital are often subject to significant uncertainty.
• D) When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.

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Definitions:

Operating Cycle

The time period between the acquisition of goods for sale and the receipt of cash from customers, measuring the efficiency of a company's operational processes.

Inventory Purchases

Transactions involved in buying goods and materials to be sold or used in the production process by a business.

Collection of Cash

Collection of cash involves the process of receiving cash payments from customers or clients, typically recorded as an increase in cash or cash equivalents on the balance sheet.

Accrual Basis Accounting

Revenues are recognized when goods and services are provided to customers, and expenses are recognized in the same period as the revenues to which they relate, regardless of when cash is received or paid.