Which of the Following Factors Should Be Included in the Cash

question 55

Multiple Choice

Which of the following factors should be included in the cash flows used to estimate a project's NPV?

• A) All costs associated with the project that have been incurred prior to the time the analysis is being conducted.
• B) Interest on funds borrowed to help finance the project.
• C) The end-of-project recovery of any additional net operating working capital required to operate the project.
• D) Cannibalization effects,but only if those effects increase the project's projected cash flows.
• E) Expenditures to date on research and development related to the project,provided those costs have already been expensed for tax purposes.

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Definitions:

Nominal Interest Rate

The rate of interest before adjustment for inflation, as opposed to the real interest rate, which is adjusted.

Expected Rate

The anticipated return or yield on an investment, saving account, or financial product, often used in planning and financial projections.

Inflation

The hike in the broad cost of goods and services, resulting in a reduction of purchasing leverage.

Labor Force

The sum of all individuals who are either working or actively searching for work within a specific country or area.