Which of the Following Best Describe Why Cash Flows Are

question 86

Multiple Choice

Which of the following best describe why cash flows are utilized rather than accounting profits when evaluating capital projects?

• A)Deducting interest expense from income and also including it in the discount rate would result in double counting.
• B)Cash flows reflect the timing of benefits and costs more accurately than accounting profits.
• C)Cash flows are more stable than accounting profits.
• D)Both A and B.

---

Definitions:

Promotional Activities

Promotional activities are marketing efforts designed to inform, persuade or remind target audiences about a product, service, or brand.

Decrease Retailer Prices

A reduction in the amount charged by retailers for goods or services, potentially to attract more customers or clear inventory.

Vertical Contracts

Agreements between firms at different levels in the supply chain, such as a manufacturer and a retailer.

Benefits

Advantages or payments provided typically by employers or government programs to support well-being, such as health insurance or pension.