Which of the Following Factors Should Be Included in the Cash

question 78

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:

Loanable Funds

A concept in economics that describes the market where borrowers obtain funds from savers, influenced by interest rates.

Interest Rates

The cost of borrowing money, expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of their funds.

National Debt

The complete value of funds that a nation's administration has accrued as debt through various methods.

Built-In Stabilizers

Automatic fiscal mechanisms, such as progressive taxation and welfare payments, that help to moderate the fluctuations of an economy's output without additional legislative action.