Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A) An asset that is sold for less than book value at the end of a project's life will generate a loss for the firm and will cause an actual cash outflow attributable to the project.
• B) Only incremental cash flows are relevant in project analysis and the proper incremental cash flows are the reported accounting profits because they form the true basis for investor and managerial decisions.
• C) It is unrealistic to expect that increases in net working capital that are required at the start of an expansion project are simply recovered at the project's completion.Thus,these cash flows are included only at the start of a project.
• D) Equipment sold for more than its book value at the end of a project's life will increase income and,despite increasing taxes,will generate a greater cash flow than if the same asset is sold at book value.
• E) All of the above are false.

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Definitions:

Unemployment

The condition of being without a job, while actively searching for employment.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs.

Resources

The total means available for economic and political development, such as minerals, labor force, and finances.

Fully Employs

A state of the economy in which all available labor resources are being used in the most efficient way.