Which of the Following Cash Flows Should Be Included as Incremental

question 22

Multiple Choice

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

• A) Investment in working capital that is directly related to a project
• B) Expenses that are incurred in order to modify a firm's production facility in order to invest in a project
• C) Opportunity costs that are directly related to a project
• D) All of the above

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Definitions:

Withheld

Refers to the portion of an individual’s earnings that is not directly paid to the individual by the employer, because it is set aside for purposes such as tax payments.

Times Interest Earned Ratio

A financial metric used to determine how easily a company can pay interest on outstanding debt with its before-tax earnings.

Interest Expense

The expense an entity faces for using borrowed capital, usually shown on the income statement.

Wage Bracket Withholding Table

A chart used by employers to determine the amount of tax to withhold from an employee’s paycheck based on their earnings and tax bracket.