A Company Is Considering a New Project

question 1

Multiple Choice

A company is considering a new project.The CFO plans to calculate the project's NPV by estimating the relevant cash flows for each year of the project's life (the initial investment cost,the annual operating cash flows,and the terminal cash flow) ,then discounting those cash flows at the company's WACC.Which factor should the CFO include in the cash flows when estimating the relevant cash flows?

• A)all interest expenses on debt used to help finance the project
• B)the investment in working capital required to operate the project, even if that investment will be recovered at the end of the project's life
• C)sunk costs that have been incurred relating to the project, but only if those costs were incurred prior to the current year
• D)effects of the project on other divisions of the firm, but only if those effects lower the direct cash flows of the project

---

Definitions:

Hegemonic Manipulation

Hegemonic manipulation refers to the practices by dominant groups to maintain control and leadership over others through cultural and ideological means, often subverting dissent.

Resocialization

The process by which individuals learn new norms, values, attitudes, and behaviors, replacing those from a previous context, often occurring in total institutions.

Kübler-Ross

A model that outlines the five stages of grief (denial, anger, bargaining, depression, acceptance), proposed by Elisabeth Kübler-Ross.

Death Trajectory

The pattern or progression of dying, how an individual’s dying process unfolds over time, which can affect the care and interventions provided.