Which of the Following Best Defines Incremental Earnings

question 16

Multiple Choice

Which of the following best defines incremental earnings?

• A)cash flows arising from a particular investment decision
• B)the amount by which a firm's earnings are expected to change as the result of an investment decision
• C)the earnings arising from all projects that a company plans to undertake in a fixed timespan
• D)the net present value (NPV)of earnings that a firm is expected to receive as the result of an investment decision

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Definitions:

Selling and Administrative Expenses

Costs related to the day-to-day operations of a business, excluding manufacturing expenses.

Internal Rate of Growth

The maximum rate at which a firm can grow its sales and revenue without needing to increase external financing, relying solely on its own profits.

Assets

Resources owned by a company or individual that have economic value and can be used to meet debts, commitments, or legacies.

Accounts Payable

This is the amount of money that a company owes to its suppliers or creditors as a result of purchasing goods or services on credit.