Which of the Following Statements Is Correct

question 37

Multiple Choice

Which of the following statements is correct?

• A) Capital budgeting analysis for expansion and replacement projects is essentially the same because the types of cash flows involved are the same.
• B) The replacement decision involves an analysis of two independent projects where the relevant cash flows include the initial investment,additional depreciation,and the terminal value.
• C) The change in working capital for a project is the difference between the required increase in current assets and the spontaneous increase in current liabilities and is always positive.
• D) The supplemental operating cash flow for capital budgeting includes return on invested capital,which is net income,and return of part of invested capital,which is depreciation.
• E) When a firm implements a project which requires an increase in working capital,both the increase in current assets and current liabilities must be financed.

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Definitions:

Appeal To Majority

The fallacy of using the fact that large numbers of people believe a proposition to be true as evidence of its truth.

Fallacy

An error in reasoning that renders an argument invalid or unsound, often due to a misleading or flawed premise.

Proposition

An assertion or declaration that conveys a personal judgment or belief, capable of being either accurate or inaccurate.

Argumentum Ad Decorum

A logical fallacy where one appeals to what is deemed appropriate by social standards rather than presenting a valid argument.