In the Fourth Year of the Vidler Project, Expected Revenues

question 20

Multiple Choice

In the fourth year of the Vidler Project, expected revenues will be $4,750,000, variable costs will be $4,000,000, depreciation expense $180,000 and fixed cash costs $570,000.Which of the following is true?

• A)Accounting income equals $0.00
• B)Free cash flow equals $180,000
• C)Free cash flow equals 0
• D)Both A and B are true.

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Definitions:

Confirmation Error

A cognitive bias that involves focusing on information that confirms one’s preconceptions and ignoring information that contradicts them.

Anchoring and Adjustment Bias

A cognitive bias where individuals rely too heavily on the first piece of information received (the "anchor") when making decisions.

Representativeness Bias

A cognitive bias where individuals inaccurately judge the likelihood of an event by comparing it to an existing prototype in their minds.

Ideation Step

The phase in a creative or problem-solving process where ideas are generated.