When Making a Capital Budgeting Decision,which of the Following Is/are

question 8

Multiple Choice

When making a capital budgeting decision,which of the following is/are NOT relevant?
i.The size of a cash flow.II.The risk of a cash flow.III.The accounting earnings from a cash flow.IV.The timing of a cash flow.

• A) I only
• B) II only
• C) III only
• D) II and III only
• E) III and IV only

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Definitions:

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its wear and tear, obsolescence, or decline in value over time.

Cost Allocation

The process of identifying, aggregating, and assigning costs to cost objects, such as products, services, or departments.

Residual Value

Residual value is the estimated amount that an asset will be worth at the end of its useful life, reflecting its expected salvage value.