Which of the Following Cash Flows Should Be Included as Incremental

question 48

Multiple Choice

Which of the following cash flows should be included as incremental costs when evaluating capital projects?

• A)Overhead expenses that are directly related to a project
• B)Interest expense that is directly related to the financing of a project
• C)Sunk costs that are related to a project
• D)Principal payments that are directly related to the financing of a project

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Definitions:

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and other forms of involvement.

Market Efficiency

A condition in which all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market.

Equilibrium Price

The price in the market where the amount of products offered matches the amount of products desired.

Socially Optimal

A condition or outcome that is most efficient and beneficial for society as a whole, often considered in economic policies and strategies.