When Projecting Future Cash Flows of an Investment, Which of the Following

question 25

Multiple Choice

When projecting future cash flows of an investment, which of the following is TRUE?

• A) Cash flow data must also include non-cash transactions like depreciation.
• B) Cash inflows and cash outflows are treated separately, rather than being netted together.
• C) Cash flows are typically projected by accounting personnel without input from other business functions.
• D) The initial investment is always treated separately from all other cash flows.

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Definitions:

Credit Applicant

An individual or entity that applies for a loan or credit from a financial institution or lender.

Accounts Receivable

Financial obligations customers have towards a business for utilized or received goods and services that remain unpaid.

Creditworthy Customers

Clients deemed capable of paying back credit extended to them due to their solid financial standing.

Prompt Payment

The act of settling a transaction or invoice on or before the due date.